Question

What information about an entiity's fixed assets would be useful to an investor? Why would that information be useful?

Answer 1

Investors or the lender values the non-current assets i.e the Fixed Assets of the company which are put under the Plant, Property & Equipment head of the Balance Sheet because

1) The assets is not bought and sold on regular basis.

2) They want know the Book Value of fixed assets and depreciation method that will define the Income and future growth of the company.

3) The more the life of the fixed assets of the entity, the longer the existence of the entity.

4) The method of disposal of the fixed assets would be useful to an investor to know the appreciation in the income due to non-operational activities.

5) The financing of the fixed assets will another point of interest of investors because more financing through borrowing will provide additional income reserve for dividend/bonus purpose.

6) Higher value of the Fixed Assets of the entity in the Total Assets will prove to be a strength as higher investment in the production or operational activities.

Better the position of the fixed assets will provide confidence to the investors and creditors to put their money in the company’s operations.

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