Asset Turnover

The proportion of a company's total assets or total investment that is attributable to intangible assets. A high intangible asset intensity — common in technology, pharmaceutical, and professional services firms — indicates that value creation is driven primarily by knowledge, data, and relationships rather than physical capital.

The total value of a company's or fund's assets minus its liabilities. For investment funds, NAV represents the per-share or per-unit value.

A physical asset, such as land, buildings, plant and machinery, vehicles or inventory. Under IAS 16 and FRS 102 Section 17, property, plant and equipment is carried at cost less depreciation or, where an entity adopts the revaluation model for a whole class of assets, at a revalued amount; land is not depreciated.

An intangible asset for which there is no foreseeable limit to the period over which it is expected to generate net cash inflows for the entity. Under IAS 38 and ASC 350, indefinite-lived intangible assets are not amortised but must be tested for impairment at least annually and whenever there is an indication of impairment.

The monetary policy tool by which a central bank purchases financial assets to inject liquidity into the economy, typically lowering interest rates and inflating asset prices. QE periods tend to compress discount rates and elevate intangible asset valuations, making it critical for investors to understand the monetary environment when assessing enterprise value.

A financial leverage ratio calculated by dividing total debt by total shareholders' equity, indicating the relative proportion of debt and equity financing in a company's capital structure. A higher ratio indicates greater financial leverage and potentially higher financial risk, while a lower ratio suggests more conservative financing.

A valuation ratio comparing a company's enterprise value to its annual revenue. EV/Revenue is often used to value high-growth or pre-profit companies where earnings-based multiples are not meaningful.

The ratio of a company's market value to the replacement cost of its assets, proposed by economist James Tobin. A Tobin's Q greater than one suggests that the market values the firm above its tangible asset base, with the excess often attributable to intangible assets such as brand, technology, and human capital.

What are the main types of intangible assets?

IFRS 3 and ASC 805, the business combination standards, group intangible assets into five illustrative classes: marketing-related, customer-related, artistic-related, contract-based and technology-based. The list is not exhaustive.

What is the difference between tangible and intangible assets?

Tangible assets have physical form: land, buildings, machinery, vehicles and stock. Intangible assets have none: they are identifiable non-monetary assets such as patents, trade marks, software and customer contracts.

How do you value a company's assembled clinical trial data in a pharma acquisition?

Assembled clinical trial data is valued using the cost approach (reproduction cost of conducting equivalent trials) or as a component of IPR&D value (its contribution to de-risking the pipeline asset).