Financial assets are an important part of the Polish economy. They are a source of income for many business entities, and also form an important part of many people’s investment portfolios. Recently, financial assets have become even more important due to the growing role of financial markets in economic life. Therefore, it is worth paying a little more attention to them and learning about the ways in which they can be used.
What are financial assets? Definition of the term
Financial assets are all types of assets that can be used to achieve a specific purpose. These assets can be physical (e.g. gold, silver) or non-physical (e.g. bonds, stocks). Financial assets are used to invest and generate cash flow. Investors buy assets to earn a return in the form of dividends or capitalization.
Capitalization is the process by which the value of an asset increases as the market price increases. Dividend is the portion of a company’s income that is distributed to shareholders. The concept of financial assets is very important for investors because it allows them to monitor their investments and assess the risks associated with them.
Long-term financial assets
Long-term financial assets are those that can be used in the future for investment or for financial purposes. Thus, these are funds that will not be needed in the near term. An example of a long-term financial asset is an investment fund. By investing in an investment fund, you can get a high return on your investment over a long period of time. Long-term financial assets are an important part of any investment strategy.
This is because they help secure funds for future investments and provide financial stability over the long term. It is worth remembering that long-term financial assets are not only investment funds. They can also be bank deposits, bonds or real estate. Each of these instruments has its own advantages and disadvantages, so it is worthwhile to carefully analyze your options and needs so that you can choose the best way to invest for yourself.
Short-term financial assets
Short-term financial assets are cash that is used in a company within one fiscal year. They are mainly cash that is needed for the company’s day-to-day operations. Short-term financial assets include cash accumulated in bank accounts, cash from sales of products and services, and cash obtained from other sources of business financing.
There are several types of short-term financial assets in an enterprise. These are:
– Cash and cash equivalents – these are cash that can be used at any time to carry out the current operations of the enterprise. The balance of cash and cash equivalents is included in the company’s balance sheet as one of the assets with the shortest turnover period.
– Short-term investments – the balance of short-term investments includes financial instruments that are held by the company for up to 12 months. Short-term investments mainly include government bonds and securities with relatively short maturities.
– Short-term receivables – the balance of short-term receivables includes cash that the company has the right to demand from its counterparties within 12 months. Short-term receivables mainly include trade receivables, which is the cash the company has the right to demand from its customers for the sale of products and services.
– Material inventories – the balance of material inventories includes cash that is needed for the company’s current production operations. Material inventories can be used within 12 months of acquisition.
