Spontaneous Assets

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DEFINITION of 'Spontaneous Assets'

The assets of a company that are accumulated automatically as a result of the firm's day-to-day business. These assets typically grow in proportion with sales. Examples may include increased inventory of goods for sale or accounts receivable.

BREAKING DOWN 'Spontaneous Assets'

The projected growth in spontaneous assets is an important component for firms to consider as they evaluate the need to borrow additional funds.

Similar to spontaneous assets, spontaneous liabilities move with changes in sales.

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RELATED FAQS
  1. What are some examples of general and administrative expenses?

    In accounting, general and administrative expenses represent the necessary costs to maintain a company's daily operations ... Read Full Answer >>
  2. How do dividend distributions affect additional paid in capital?

    Whether a dividend distribution has any effect on additional paid-in capital depends solely on what type of dividend is issued: ... Read Full Answer >>
  3. Why can additional paid in capital never have a negative balance?

    The additional paid-in capital figure on a company's balance sheet can never be negative because companies do not pay investors ... Read Full Answer >>
  4. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
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