Asset/Liability Management

What is 'Asset/Liability Management'

Asset/liability management is a technique companies employ in coordinating the management of assets and liabilities so that an adequate return may be earned.

Also known as "surplus management."

BREAKING DOWN 'Asset/Liability Management'

By managing a company's assets and liabilities, executives are able to influence net earnings, which may translate into increased stock prices.

RELATED TERMS
  1. Matched Book

    A bank is running a matched book when the maturities of its assets ...
  2. Mark To Management

    The theory that a good, asset/liability or service can be assigned ...
  3. Dynamic Gap

    Refers to asset and liability risk management at financial institutions. ...
  4. Economic Value Of Equity - EVE

    A cash flow calculation that takes the present value of all asset ...
  5. Liability Management

    Use and management of liabilities, such as customer deposits, ...
  6. Maturity Gap

    A measurement of interest rate risk for risk-sensitive assets ...
Related Articles
  1. Investing Basics

    Examples Of Asset/Liability Management

    In its simplest form, asset/liability management entails managing assets and cash inflows to satisfy various obligations; however, it's rarely that simple.
  2. Retirement

    Mortgage Asset-Liability Management Made Easy

    Should you refinance your mortgage to purchase other assets? Learn how to weigh your risk.
  3. Economics

    Understanding Total Liabilities

    Total liabilities are the combined debts an individual or company owes.
  4. Investing

    What's a Liability?

    A liability is a debt. It is an obligation that arises during the course of business and represents a third-party claim on the company's assets. A liability can arise in a number of different ...
  5. Economics

    Explaining Long-Term Liability

    A long-term liability is an obligation a company owes a year or more into the future.
  6. Investing

    5 Benefits of Investing With One Asset Manager

    Learn why one asset manager may be better for your portfolio’s rate of return and underlying costs as opposed to many managers.
  7. Investing

    Current Liabilities

    Current Liabilities are company debts due within one year or one operating cycle, whichever is greater. An operating cycle is the time it takes a company to purchase inventory and convert it ...
  8. Investing Basics

    Explaining Assets Under Management

    Assets under management is a metric that measures the market value of assets that an investment company manages for investors.
  9. Personal Finance

    A Career In Real Estate Portfolio Management

    Find out why this job more closely resembles the role of a CEO than an asset manager.
  10. Bonds & Fixed Income

    Figuring Out How To Cover Your Liability Bases

    Whenever we talk about the asset-liability approach to portfolio management (ALM), the concepts of immunization and cash flow matching come into play.
RELATED FAQS
  1. What is the difference between an expense and a liability?

    Learn what liabilities and expenses are, which financial statements they are listed on, and the differences between liabilities ... Read Answer >>
  2. How might a company's contingent liabilities affect its share price?

    Discover what contingent liabilities are, and how and to what extent such liabilities may have an impact on a company's share ... Read Answer >>
  3. What are some examples of current liabilities?

    Examine some common examples of current liabilities a company may owe within a year or less in order to accurately assess ... Read Answer >>
  4. Why might two companies calculate capital employed differently?

    See why not every company defines and measures capital employed in the same manner, and which methods are most common in ... Read Answer >>
  5. For what purpose is the consumer surplus figure used?

    Understand who uses the consumer surplus figure and why it's used. Learn why companies want to minimize consumer surplus ... Read Answer >>
  6. In a Corporation's financials, surplus earnings are accounted for as ...

    D is the correct answer. Surplus earnings are either plowed back into the company (retained earnings) or they are paid out ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center