why is asset management is very important in an organisation?

Answer 1

Asset is the opposite of liability on your balance sheet. One represent what you own and the other what you owe. Managing you asset is important because you need to deploy your assets wisely in order to generate the highest earning possible. You also need to take care of it so it may offset what you owe. For example, a plumber needs his wrench to do his job and it cost him money to buy his tools.He loses the wrench he loses his investment and his ability to earn a living.

Very often, asset management is used to discuss fixed asset (large assets such as trucks, ships, buildings, manufacturing facilities, etc). These assets are bought with bank loans. If you finance a piece of machinery and not take care of it, it may completely break down before you bank loan is paid off. Now the piece of rusted iron is not generating revenue and you still have the monthly payment.

There are lot more details in asset management than what we have time to discuss here. But one of the financial ratio closely monitored to determine the health of the company is "asset to liability ratio, a ratio to indicate whether the company owns more than it owes, (a 2 to 1 ratio is generally considered to be reasonably good). Return on asset (how much money earned per dollar worth of asset, (or the efficiency of the company). Stockholders, banks watch these ratios carefully.

Answer 2

Generally, asset management is the process of making best use of an organisation’s assets in order to maximize organizations value and to provide with the best possible ROI to stakeholders in the organisation. If the management finds hard to do asset management by their own, they can take help of asset management firms which can do the work for them

Answer 3

1) To maintan an understanding of the organizations worth. (given depreciation and whatnot, for all manner of tax reasons)
2) To understand assset utlization. (Machine #1 is an asset that produces x but has capacity of 3x, or machine one has capacity of x and we have orders for 3x)
3) To adequately understand the investments required to maintain assets. (preventive maintenance, critical spare parts...)
4) To understand how to make future investments.

I'm sure I am missing some more reasons.

Answer 4

To prevent theft and loss. if you don't know what you have or where it is then how will you know when you need to buy something, if it is a closet somewhere or in the possession of one of your employees or if it was sold on eBay.