Definition of Active asset:
Machine, equipment, or other asset used in the daily revenue generating operations of a business.
An active asset is an asset that is used by a business in its daily or routine business operations. Active assets can be tangible–such as buildings or equipment–or intangible–such as patents or copyrights. They are reported in the asset section on a business's balance sheet. Active assets are also sometimes called core assets.
Businesses depend on active assets in order to function on a daily basis. When analysts and business managers are monitoring a business's operations in order to spot potential disruptions, they typically pay close attention to the active assets of a company. If certain assets, especially those which are vital to standard day-to-day business operations–are fluctuating, it could signal an impending deterioration in financial or operational performance. Today, active assets are standard elements in enterprise risk management (ERM) methodologies.
How to use Active asset in a sentence?
- In contrast, passive assets are not central to the daily operations of a business but can still produce income.
- Active assets are used by a business in its daily or routine business operations for the purpose of revenue production.
- Active assets become inactive assets when they lose their ability to generate revenue.
- Active assets are standard elements in enterprise risk management (ERM) methodologies.
- The level and nature of an active asset's performance will vary based on its specific business environment.
Meaning of Active asset & Active asset Definition