Tangible asset

Tangible assets are physical, measurable assets used in business operations — property, plant and equipment (PP&E), vehicles, machinery, inventory, land and buildings. They contrast with intangible assets (non-physical value creators such as brands, patents and customer relationships). In financial due diligence, tangible asset analysis covers: condition and remaining useful life (technical due diligence), replacement cost versus book value (hidden reserve identification), capex requirements and environmental or maintenance obligations. In asset-based valuations, tangible assets are revalued at market or replacement value.

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Example: a Swiss manufacturer carries tangible assets (PP&E) at CHF 12.0 million net book value. Technical review reveals the machinery fleet averages 14 years of age (vs 10-year typical useful life), implying CHF 2.0 million of immediate replacement capex requirements. This capex underfunding — invisible in the income statement — reduces the economic net asset value and requires restatement in the DCF free cash flow model.

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Hectelion analyses tangible asset quality and capex requirements in every acquisition due diligence, identifying hidden reserves and underfunded replacement needs.