Nonfinancial Asset

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DEFINITION of 'Nonfinancial Asset'

An asset with a physical value such as real estate, equipment, machinery, gold or oil. For example, gold is considered a nonfinancial asset because it has inherent value based on its use in jewelry, electronics, dentistry, ornamentation and historically as currency. Cash, on the other hand, is a financial asset because its value is based on what it represents. The paper the cash is printed on has very little value by itself.

BREAKING DOWN 'Nonfinancial Asset'

The value of a financial asset can be based on the value of a nonfinancial asset. For example, the value of a futures contract is based on the value of the commodities represented by that contract. Commodities, which are tangible objects with inherent value, are an example of a nonfinancial asset. Futures contracts, which do not have inherent physical value and whose value is based on the assets they represent, are an example of a financial asset.

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RELATED FAQS
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    Some penny stocks, those using the definition of trading for less than $5 per share, are traded on regular exchanges such ... Read Full Answer >>
  3. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  4. How are American Depository Receipts (ADRs) priced?

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