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Physical asset specificity, e.g. a specialized machine tool or complex computer system designed for a single purpose; Human asset specificity, i.e., highly specialized human skills, arising in a learning by doing fashion; and; Dedicated assets, i.e. a discrete investment in a plant that cannot readily be put to work for other purposes.
As an illustrative example, suppose Delta Air Lines wants to exit its business but has a significant amount of debt owed to investors. They used the investor funds to purchase airplanes. Airplanes can only be used by the airline industry, classifying them as specific assets. Depending on the age of the planes, the assets might have a low scrap ...
A higher credit rating could allow the special-purpose vehicle and, by extension, the originating institution to pay a lower interest rate (and hence, charge a higher price) on the asset-backed securities than if the originating institution borrowed funds or issued bonds.
Complementary assets are assets that when owned together increase the value of the combined assets. It is defined as “the total economic value added by combining certain complementary factors in a production system, exceeding the value that would be generated by applying these production factors in isolation.” [1] Thus two assets are said to be complements when investment in one asset ...
The third-most common method of estimating the value of a company looks to the assets and liabilities of the business. At a minimum, a solvent company could shut down operations, sell off the assets, and pay the creditors. Any cash that would remain establishes a floor value for the company. This method is known as the net asset value or cost ...
Businesses with multiple shareholders who prefer not to have personal liability tied to business expenses will also benefit. 5. High-Limit Business Credit Cards. High-limit business credit cards ...
In business, a competitive advantage is an attribute that allows an organization to outperform its competitors.. A competitive advantage may include access to natural resources, such as high-grade ores or a low-cost power source, highly skilled labor, geographic location, high entry barriers, and access to new technology and to proprietary information.
The impact of investments of human capital and physical capital can be measured and analysed with the same ratios to measure and analyse the investment performance of physical assets. Both of these investments lead to fundamental improvements in the business model and better overall decision-making. The balance sheet provides an overview, which ...