Productive asset

A productive asset is an asset that allows obtaining economic profitability by owning it. We also consider productive assets those that generate added value in the case of a company.

Productive asset

In the world of economics and accounting, it is common to use the word asset. Within this broad term, we can make a distinction between two types, productive assets and unproductive ones. In this article we will explain everything related to productive assets.

A productive asset is capable of generating economic profitability or providing added value to the company. There are many assets of this type since everything depends on the use that is given to them.

Productive asset characteristics

In the case of the company, these are the main characteristics of a productive asset:

  • They are not assets that generate a specific profitability, it must be sustained over time.
  • These assets are not related to the main economic activity of the company. They must be independent and generate such profitability on their own.
  • The income they generate must be greater than their expenses. In the case of being equal or inferior, we will consider them unproductive assets.

Productive assets in the personal sphere are all those that generate a constant flow of income for their owner.

Difference between productive asset and unproductive asset

As we already know, productive assets are all those that generate profitability over time. In the case of non-productive assets, they are all those that are destined for other uses except to obtain economic profitability.

Suppose that a company decides to buy four apartments on the beach for the vacation periods of its employees. These floors are intended to increase the motivation of the workers and their satisfaction with the company. From these four properties, the company will not obtain any economic profitability, so we will categorize them as non-performing assets.

Examples of productive assets

Below we explain the main examples of productive assets that exist. For example, as we have seen in the previous section, a property can be considered a productive asset or not, depending on its use.

  • Financial assets: In this case, we can include bonds or stocks that frequently generate profitability. The shares that offer dividends to their investors, higher than the falls in the price, can also be considered productive assets.
  • Real estate: Those properties that are rented and that offer an income to their owner, would be included in this group.
  • Patents and trademarks: It is a very important asset that can generate a great income stream. Sometimes patents and trademarks are transferred in exchange for financial remuneration.
  • Intellectual property: In relation to the previous example, creators of content such as music, works of art or literary works, can also receive a return for each time they market any of their products.

In conclusion, productive assets are those that generate a constant economic profitability by owning them. There are many types depending on their form and the type of profitability they offer.