Financial assets are any type of asset that may be presented:
- in cash;
- equity participation in the authorized capital of another company;
- the right under an agreement to receive any financial asset of a company or cash, as well as to exchange a financial asset or a liability of another company on conditions that are theoretically favorable for that company;
- an agreement, the calculation of which can be made with its own equity instrument, which is non-derivative if the company has an obligation to receive a variable number of its own shares or derivatives, in which the calculation can be made in any other way, except for exchanging a certain amount of money or another financial asset for the equivalent amount of its own share in the company. That is why contracts for the provision or receipt of own equity instruments of the company in the future are not included in the equity documents of the company.
Own financial assets - their assessment is made according to the following division into four categories:
1) financial assets at fair value as a result of profit or loss;
2) financial assets available and ready for sale;
3) accounts receivable;
4) investments that are held until full repayment.
Like any economic category, financial assets have certain properties, the main of which is the ability to increase the company's profitability. So, any company will never invest in the acquisition of property that would not have this property.
Risk and profitability of financial assets are considered as interrelated categories. So, the risk represents the potential probability of losing a certain amount of invested funds or not receiving income in predicted or planned amounts. From generally accepted practice, there is a risk assessment using the concept of leverage.
The activity of any enterprise is constantly associated with production or financial risk, which must be taken into account depending on the position of the company. Thus, a company can be characterized both from the position of available assets (production risk) and the source of funds (financial risk).
Production risk is always due to the characteristics of the functioning of the company within a particular industry. The structure of assets in which the company plans to invest its own capital depends on this . This type of risk is determined by such factors as regional characteristics, national traditions, market conditions, as well as infrastructure.
Financial risk is determined by the structure of sources of funds, which implies ways of investing funds and sources of their formation. An important issue remains the ratio between borrowed and equity.
Financial assets: the assessment of risks and factors that determine them is carried out using the analysis of the resulting profitability. The relationship of profit with the valuation of costs associated with the acquisition of assets or other fixed assets that are necessary to obtain this profit are characterized using an indicator such as leverage. This indicator can be characterized by the ratio between variables and fixed costs.
The financial assets of any enterprise reflect the general well-being, prospects for increasing profits and characterize the organization’s readiness for further development and expansion of production activities.