What are 'fixed assets'?

Fixed assets refer to long-term tangible pieces of property or equipment that a business uses in its operations to generate income and support its activities. These assets are not expected to be converted into cash within a year; rather, they are utilized over an extended period, often contributing to the production of goods or services. Examples of fixed assets include buildings, machinery, vehicles, and land.

Identifying fixed assets is essential for understanding a company's investment in its operational infrastructure, which can significantly impact its financial health. These assets typically involve significant capital expenditures, and their value depreciates over time, which must be accounted for in financial statements to accurately reflect the company's financial position.