Definition of tangible resources

Written by alan osborne | 13/05/2017
Definition of tangible resources
Physical inventory is one example of a tangible resource. (Michael Blann/Lifesize/Getty Images)

Tangible resources or assets are any company property that has a physical existence. A tangible resource is one that you can "reach out and touch."

Examples and uses

Hard currency, equipment and real estate are all examples of tangible resources.

By contrast, intangible assets are those which have no physical form. Copyrights, patents and reputation are examples of intangible assets. Tangible resources are also commonly called tangible assets or physical assets. Every business will comprise both tangible and intangible resources. Tangible resources are those which can be seen and touched. They include things that can be reproduced, such as plants and machinery, and things that cannot be reproduced, such as real estate and land. As tangible resources are comparatively easy to appraise, they are often used to determine a company's value.

Exchangeability is key

A second way to determine whether a resource is tangible is how readily it can be exchanged for cash (if it isn't already cash). The amount of money in a company account is a tangible resource. Property such as cars, real estate and machinery are tangible resources as well, and are often used as collateral when a business seeks a loan. When businesses face financial hardships, cost savings often come from selling some tangible resources.

Fixed resouces

Definition of tangible resources
Machinery is one example of a fixed resource. Fixed resources are generally intended for long-term use (Jupiterimages/ Images)

There are two types of tangible resources. Fixed resources are purchased for long-term use. Fixed resources, more commonly referred to as fixed assets; include such items as land, buildings, machinery, furniture and tools. It is important to note that "fixed" resources are still subject to factors such as depreciation and obsolescence.

Current resources

Definition of tangible resources
Currency holdings are considered a tangible resource. (Jupiterimages/Brand X Pictures/Getty Images)

The second type of tangible resource, current resources (or current assets), are those that are expected to be consumed or turned into cash within a year or business cycle. Cash itself is a current resource. Other current resources include inventory, receivables, short-term investments and prepaid expenses. Note: cash includes cash equivalents such as money orders, bank notes and checks.

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