List your assets

close up of man's hands writing in book with pen
fizkes / Shutterstock

To calculate how much you have in assets, you’ll need to compile a list of all the assets you own.

This can include tangible things like:

  • Cash (both what you have in the bank and what’s owed to you through accounts receivable) and investments.
  • Office furniture, equipment and electronic devices.
  • Vehicles.
  • Real estate.
  • Unsold inventory.
  • Trademarks and patents.
  • Employment contracts.
  • Customer lists.

There are also less tangible assets you should factor in, including your brand’s reputation and your customer relationships.

Bill Gates made a splash in 2017 when he bought $520 million worth of U.S. farmland, and he’s continued to invest since. What’s in it for Gates?

Read More

Make a balance sheet

Pen, calculator On the financial account documents
catshila / Shutterstock

Once you’ve compiled your assets, you’ll want to make a balance sheet. It doesn’t have to be a complicated spreadsheet — you just need to track your assets as well as your liabilities and net worth.

Balance sheets are not only important financial statements, but they also help you easily calculate your total assets.

Add up your assets

woman adding up numbers with calculator
Lee Charlie / Shutterstock

You can either use accounting software to add up your assets or do it yourself manually. With the help of a free balance sheet calculator, you can easily determine the total for yourself.

There’s an accounting formula used in double-entry bookkeeping that you can use to check if the number you’ve come up with for your total assets is correct. This is what it looks like:

Total Liabilities + Equity = Total Assets

Your liabilities are the money coming out of your business, whether that be the taxes you owe, your operating expenses or payments on a business loan. Your equity is your company’s net worth (this is also known as your capital).

If the number you came up with when you added up all of your assets matches your total liabilities plus equity, then your initial calculation was correct. If the two sums aren’t the same, you should probably go over your numbers again.

It seems like a tricky time to get into real estate, and being a landlord isn't as passive as you think. Look at these low-stress options instead.

Read More

The average total assets formula

man and woman look at computer screen seriously
SFIO CRACHO / Shutterstock

Now that you know how much you have currently in assets, you’re just one step away from finding your average total assets. What you’ll want to do is add the amount of assets you had last year to what you have this year, then divide that figure by two.

What does this tell you? First, it’ll give you an idea of how much asset turnover you have.

And second, when you compare your average total assets to your annual sales, you get an idea of the amount of assets you need to support the revenue you’re generating.

If you’ve got high sales and low assets, it shows you’re using your assets very efficiently. If it’s the other way around, it’s a sign you may need to dig a little to find some more efficiencies in your business.

More: Personal Capital matches you with an advisor to help you monitor and manage your finances with confidence.

Are you thinking about saving? Well, stop thinking about it!

Take the change out of your piggy bank and make it work for you.

Acorns is a financial wellness tool that automatically rounds up your card purchases to the nearest dollar and puts those savings into an investment account. It takes the worrying out of investing and matches you with one of five investment portfolios.

Take five minutes to sign up for Acorns today and collect a $10 bonus.

What's Next

About the Author

Sigrid Forberg

Sigrid Forberg

Reporter

Sigrid is a reporter with MoneyWise. Before joining the team, she worked for a B2B publication in the hardware and home improvement industry and ran an internal employee magazine for the federal government. As a graduate of the Carleton University Journalism program, she takes pride in telling informative, engaging and compelling stories.

What to Read Next

5 wise money moves before the Fed starts raising interest rates again

Time's almost up on ultralow rates, so don't be caught off guard.

How to get a free credit score

Whether you know your credit score or not, it’s probably having a big impact on your life.

Disclaimer

The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.