Fundamental Analysis: Assets on a Balance Sheet


Fundamental analysis takes into consideration everything that affects a company. And these things include quantitative and qualitative factors.

Balance sheet written on paper

Quantitative factors are those that can be measured in terms of numbers. These figures tell us quite quickly the things we need to know about the financial health of a company. You can analyze these things to gauge the strength of the company, ultimately deciding whether it is a good investment or not.

And for this article, we’re going to focus on the balance sheet, where we can find useful and important data about the company’s finance. Further, we will narrow down the focus into the assets of the company found on the balance sheet.

Assets on a Balance Sheet

The company’s balance sheet shows you what the company owns, what the business owes, and the total equity of the shareholders. Let’s take a look at the assets found on the balance sheet.

The Company’s Assets

In general, you can find two types of assets on a balance sheet: the current asset and the non-current assets.

Current assets refer to the assets that the company will like use up or convert into cash within 12 months or one business cycle. Current assets are further divided into three important categories, which are the cash, inventories, and account receivables.


Companies with large cash reserves are typically attractive for investors. When the company has huge cash reserve, they are practically insured against tough times like market crashes, market corrections, and volatilityand risks. Having cash can provide the company some option for future expansion.

However, growing cash reserves do not always guarantee strong performance. If you think the company has way too much cash reserve than what is healthy, then you need to start asking questions. It could be a sign that the company no longer has any investment opportunities. Nonetheless, a company with very low cash reserve is a huge red flag for investors.


Inventories refer to the products that the company has not yet sold. In general, you want to see the company’s inventories to tie up with their sales or cash. The company needs to sell the merchandise that they make to suppliers. The red flag here is if the inventories grow faster than the cash reserve.

Account Receivables

When we say account receivables, we refer to the company’s uncollected bills. Based on this data, you can measure the company’s speed when it comes to collecting what others owe.

Be wary of companies that take a long time to collect bills. It’s better to see a company that collects cash quickly than one that waits longer.

Non-current assets, on the other hand, are those that do not belong to any of the above categories.


The balance sheet and the assets of the company are very important to analyze if you want to gain an accurate measure of a company’s financial health. However, fundamental analysis doesn’t only focus on what the company owns but also on what it owes. So remember to check its liabilities too.

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