Definition Definition

Operating asset VS Financial asset

Definition (1):

An operating asset is used for producing goods or services for selling to customers in operations.

A financing asset is used to store excess cash for reinvesting in operations, paying off debt, or paying dividends.

Definition (2):

An operating asset is an asset acquired for use in the performance of the continuing functions of a business. It means an asset that is required for generating revenue. Some examples of these assets are cash, accounts receivable, prepaid expenses, fixed assets, and inventory. Mostly, these assets possess a physical form or inherent physical value. Recognized intangible assets like technology licenses required for manufacturing goods, should be regarded as these assets too.

A financial asset is a short-term investment in bonds, hedge funds, private equity, and other forms of securities. It is a liquid asset getting its value from an ownership claim or contractual right. Some examples of these assets include cash, bonds, stocks, bank deposits, and mutual funds. This type of asset doesn’t necessarily possess a physical form or inherent physical value. Instead, their worth reflects factors of demand and supply in the market where they trade and the level of risk they bear.

Generally, an operating asset carries more value or worth than a financial asset.

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