Total Assets
The sum of all economic resources a company holds — its entire household, funded by shareholders' money (equity) and borrowed money (debt).
In plain terms
Total assets is the sum of everything a company owns. Cash in the bank, money owed (receivables), inventory in the warehouse, factories and facilities, goodwill from acquisitions — the entire household of the company.
This household is funded by two kinds of money: money shareholders put in (equity) and borrowed money (debt). So "total assets = equity + liabilities" always holds (the basic accounting equation).
What it tells you
Total assets is the size of the resources a company has mobilized to run its business. ROA (how much it earns on total assets) is computed on this, letting you see "how efficiently it earns from this large household."
The difference between equity (own money) and total assets (own + borrowed) is the borrowed money (debt), so comparing the two reveals how much debt the company uses.
Formula
total assets = shareholders' equity + total liabilities (= cash + receivables + inventory + facilities + goodwill, and all other assets)
What high or low means
Large total assets is not automatically good. Earning the same profit on fewer assets (asset-light) is more efficient (higher ROA). Lots of assets that do not earn is inefficiency.
A big acquisition or facility investment suddenly swells total assets. ROA can look temporarily low then, because there is a lag before the investment bears fruit.
Normal asset size differs completely by industry. Banks have astronomical assets from loans and deposits, while software is asset-light. Across different industries you cannot simply compare total assets or ROA.
Among the assets there may be goodwill — "the premium paid in an overpriced acquisition." If the business falters, this asset value gets written down sharply (impairment), shrinking total assets and equity at the same time.
How leases (assets you rent) are accounted for changes the size of total assets, which can distort company-to-company comparison.
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see Total and other financial metrics alongside the sector average.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.