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Construction SiteAs your company expands, it would be almost impossible for your plant assets not to follow suit. What are plant assets? In a word, plant assets are the direct and indirect materials that allow you produce goods and/or services. So as your company grows, so too will your plant assets.

There are four primary types of plant assets and below you will find all the fundamental information on managing them. If you’re already ready for expansion, check out this action plan to profitably expand your business through international sales and partnerships.

A Detailed Definition

Plant assets are commonly referred to as fixed assets. This is because most plant assets are either 1) long-term assets, 2) assets that are difficult to liquidate, or 3) both. Long term assets are often difficult to liquidate, and vise versa.

The four main categories of plant assets are buildings, equipment, land and improvements. Only one of these is considered to avoid depreciating over time (at least, generally speaking): land. The reason the other three are depreciable is because no matter how well-built or well-designed they are, in the end time will get the best of them and they will either need to be replaced or repaired.

For more information on financial analysis, refer to this excellent course on the basics business finance (with advice on how to use Excel to construct financials).

Low vs. High

Some companies will have a much higher percentage of plant assets than others. As you might have guessed, these tend to be industrial companies or companies that deal with physical products.

Much of the booming tech industry has extremely low percentages of plant assets (office buildings with computers), while an older industry like oil would have an extremely high percentage of plant assets (buildings, shipping infrastructure (ships, trucks, etc.), equipment, land, etc.).

If you know how to understand different financial analysis reports, then you can readily make sense of how a company structures its plant assets. Read this great blog post on financial analyses for examples and explanations.

4 Categories Of Plant Assets

Let’s take a closer look at the four categories of plant assets: buildings, equipment, land and improvements. The things we want to discuss are which assets fall into each category and how do we determine the overall cost/percentage of the assets.

1. Buildings:

2. Equipment:

3. Land:

4. Improvements:

Now that you’re ready to expand your business and bring your plant assets up to speed, it’s time to educate yourself on making smart decisions. Get hands-on learning from this top-rated class on real estate investment analysis.

Page Last Updated: February 2020

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