How Good Is Your Asset Management
The level of technological advancement and lifespan of your assets, how well each is used, and the cost that goes into each fall under the responsibility of asset management. As defined by Investopedia, an online financial content site, net worth is the result of liabilities subtracted from the total worth of assets in a nutshell.
A company’s net worth gives a picture of its financial health at present and the direction where the company is headed. It reflects the forecasted performance and, if negative or decreasing, the seriousness of problems it’s facing. Mismanagement of the assets would determine the firm’s success or failure.
But how do you know if you’re company is on track or not? Here are questions to self-assess your firm.
- Where are we on the asset-management roadmap?
If you don’t know where to go, “then it doesn’t matter which way you go,” as the Wonderland Cheshire cat’s adage goes. You’ll be able to plan more clearly how to reach your end goals when you see how far you have to go. Be clear on what your asset management goals are and how they tie up with the rest of the company’s plan.
Compare your predictions of the business’ future against the roadmap. It would also be easier to chart a course when you know where you fall short and what lies ahead.
- What do our metrics say?
The most referred to in the business world is the return on equity (ROE). Yet this heavy reliance on this single metric focusing on investor satisfaction blinds the company to “a lot of potential problems. If investors aren’t careful, it can divert attention from business fundamentals and lead to nasty surprises,” according to Harvard Business Review journal.
They recommend using return on assets (ROA) “to analyse long-term profitability trends,” particularly when evaluating the market and comparing with competition.
- What’s the predicted movement of sales in the next 12-24 months?
You should be able to compare with where you are now financially and where you seem to be headed. Investopedia explains the open-ended nature of the question also allows you to identify what issues determine how well your asset management is.
Being unaware of this forecast is now becoming a must for asset managers. Firms now expect them to have financial modelling skills, according to Cobalt Recruitment, a specialist recruitment provider. They should be able to foresee a company’s future earnings and make decisions towards improving them.
- Are there any company expenses that don’t add value for the customer?
This is a low-risk and high reward tactic. On your end, you get to save more and redirect your resources to other products and services with more potential or develop new ones. Your share of the market won’t receive negative impact.
The better use of company money, time and labor to improve the business portfolio will eventually result in more satisfied consumers and even a larger share of the market.
Net worth doesn’t only give your company an overview of current performance to guide you in decision-making. It also provides your company leverage when applying for loans and investment, assurance to lenders and investors. With the additional cash, you’d be able to map your company’s activities that promote your business’ productivity and financial health.