What is a 'Physical Asset'

A physical asset is an item of economic, commercial or exchange value that has a material existence. Physical assets are also known as tangible assets. For most businesses, physical assets usually refer to properties, equipment, and inventory. Physical assets are the opposite of intangible assets, which include such things as brand names, patents, trademarks, leases, computer programs, customer lists, franchise agreements, domain names or trade secrets.

BREAKING DOWN 'Physical Asset'

Usually, physical assets refer to things that may be liquidated in the event of default in order to pay off debts. Physical assets belonging to a restaurant company, for example, would include chairs, tables, refrigerators and food. Although some physical assets can be inventoried or stored, they may be diminished through depletion, depreciation, deterioration or shrinkage in the storage process.

Physical assets also differ from financial assets. Financial assets include stocks, bonds, and cash, and although they may fluctuate in value, unlike physical assets they do not depreciate over time.

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