Holdings are ... Value and essence

Where do companies get assets from? Why are they sometimes called assets? Is it a mistake, or is there any difference between these terms? What is the meaning of the word "holdings"?

Essence

Any person who knows a little French will say that avoir is a verb that in translation means "to own, to possess." In general, this fully reflects the essence of the assets in a broad sense: they are cash in any form, as well as property, through which the obligations of their owner can be repaid. More often this term is used to refer to bank finances that are kept abroad in foreign currency, but this equally can apply to an individual.

Where do they come from? Like any assets, they need to be earned or invested. If the start-up capital allows (or requires legislation), then the assets must be created immediately. But it is better to increase turnover by temporarily sacrificing reserves.

Varieties

Holdings are not only "live" money, but also, for example, letters of credit, bills of exchange, checks, precious metals, etc. They differ in different liquidity and, depending on this, the company chooses what will be the composition and size of its assets in A certain period of time.

In this sense, monetary holdings are not a tautology, since this is the most readily available source of funds-cash or non-cash money. They are characterized by the greatest liquidity, which means that they will be the first to repay debts.

All other assets are securities, bills of exchange, letters of credit, checks, transfers, as well as any short- or long-term financial investments , etc., although they can serve as sources of funds, but time is spent for their implementation. So they are less liquid and therefore not so valuable.

Allocate different types of assets:

• Free;
• Blocked;
• A certain mode of use;
• Operational (for current payments);
• Insurance (reserve);
• Investment;
• Compensatory.

Of course, they have different purposes, their forms differ, but in general, assets are all the above.

Using

As is clear from the definition of this concept, assets are means that are intended to repay the obligations of their owner. In addition, with their help is conducted economic activities, because in fact they are assets that allow companies to stay afloat and even make a profit.

If we talk specifically about banking holdings, they are used for international transactions and settlements. In addition, they can serve as a kind of "pillow" in the event that the financial institution will have any problems, that is, roughly speaking, this is a kind of piggy bank. That is why the rational and proper placement of bank assets is one of the most important and serious issues of the management of the said institution.

What is the difference between this term and assets? Perhaps, it has already worn off. If earlier it was possible with a sufficient degree of confidence to say that assets are a term that is used exclusively in the banking environment, now it is not so. This word can mean the funds of any individual or legal entity, as well as the whole state. So, in fact, the difference in these concepts is no longer there.

Features

Holdings are a potentially powerful tool of impact on their owner. The point is that when it comes to foreign property, it is obvious that it is subject to the laws of the state where it is located. And in some cases accounts can be blocked, so that the owner can not dispose of the funds on them. This can be actual in periods of wars, economic blockades and other conflicts. In addition, partial blocking of assets can help in resisting the export of capital from the country.