Every company has tangible assets (computers, copiers and company
cars, for example), but few companies use them to create shareholder
value and increase cash flows and income. The more money a company has
invested in these assets, the greater the impact asset visibility,
knowledge and control will have on the bottom line.
Here are some things a company should consider when determining
whether its assets are creating value:
 What is the status or condition of the
tangible assets in the company’s portfolio?
Valuable assets may be idle because they are in
disrepair or have been replaced. These assets should be repaired
or redeployed within the organization so they can be put to
better use. If the company has no use for them, it can sell them
for cash or donate them for a tax deduction.
Is the company using its assets efficiently?
Employees or departments will often “squirrel
away” shared assets that are in high demand to ensure they are
available when they need them. This can lead a company to
purchase and maintain excessive assets while others sit idle.
Does the company experience redundant
purchases of assets? This is a classic case
of one hand not knowing what the other is doing. One
department or employee may stop using an asset while another
employee or department still needs that item. Unless the two
parties have a means of communicating their needs, the company
risks purchasing assets it already has.
What is the fair market value of an asset?
If an asset reaches the end of its life, a
company has several disposal options: sell, trade, donate or
scrap. It’s important to know which option creates the most
value for the company, either in cash benefit or from a tax
deduction.
What does it cost the company to maintain
its assets? In some cases, the cost of
maintaining older assets may exceed the cost of buying or
leasing new ones. In other cases, even if the purchase or
lease costs of a new asset exceed those of maintaining an
older one, the secondary benefits of newer technology and
increased reliability may be enough to justify the new
acquisition.
Is the company paying too much property tax
on its assets? Companies often lose track of
what assets they have at which locations. Many times this
results in double payment of property taxes. In some cases
companies may maintain a record of assets they no longer own,
resulting in excessive and unnecessary property taxes.
Does the company know precisely when to sell
an asset to capture the most value? And
where can the company sell the asset fastest for the most
money? The availability of a new model can dramatically reduce
the fair market or trade-in value of an existing asset.
Knowing what factors will have an impact on asset value in
advance enables you to plan to sell or dispose of an asset in
a way that preserves its value within the organization.
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| Source: iVita Corporation, Houston,
www.iVita.com . |
