What are Core Assets
Core assets include all assets essential, important or valuable property of a business, without which a company cannot carry on with its revenue-generating activities. A business would dissolve without its core assets, and companies that sell off core assets are usually liquidating and on the verge of bankruptcy.
BREAKING DOWN Core Assets
Core assets are crucial to the continued success of a business. These assets help the business run and stay viable. Companies that are having money trouble tend to raise money initially by selling off non-core assets (assets that are not essential to the continued functioning of a business), not core assets.
As part of defining and executing a business strategy, a firm will require assets that are necessary to carry out this strategy; these assets represent core assets. These essential inputs to production differ from discretionary assets, which as are often deemed nice to have but not essential to carry out central day to day functions.
Examples of Core Assets
Businesses operating in various industries or geographic regions will carry different sets of core assets. For instance, a beer manufacturer from the consumer staples sector will require specialized equipment as a core asset. While a software design business from the information technology sector will list intellectual property as a core asset, even though it is technically intangible in nature.
Analysts and investors monitor a business's core assets for material change or worrisome trends. When business activity slows, businesses may reluctantly sell-off core assets to raise capital for current liabilities. This creates the potential for adverse business outcomes because central inputs to production may not be available at a later date.
Generally, core assets are financed by long-term capital, such as bonds. Core current assets may also be referred to as “Hardcore Working Capital.”