Asset Base
The value of your company’s assets, often used to secure a loan.
The calculation of your assets doesn't change if you, say, spend a ton of dough stocking up on inventory. Like if you're a zombie fashion hosiery company and you're stocking up on um...stockings (the thick kind that keep zombie goop inside their bodies) you'll spend a lot of cash to buy that inventory. But the calculation of your assets inherently doesn't change. Rather, the assets go from very liquid (i.e. in the form of cash) to very illiquid in the form of hard-to-sell zombie hosiery.
Lenders care about asset bases because it is what drives their perception of risk in lending you money. If you're Apple or Google with $100 billion just in cash on the books, how well would a lender sleep loaning the company $10 billion in Australia to build out a manufacturing facility if that ten is backed by the hundred in the U.S.? Yeah, probably little sleep lost.
But now instead of GOOG, it's loaning money to Best Buy who may or may not even be around in 10 years. So they'd want to know about that asset base...like if Best Buy actually OWNED instead of leased their stores, there's at least a load of assets behind the loan that the lender could sell to get their money back. Zombie Apocalypses happen all the time so lender sensitivity to asset base size... matters.
Related or Semi-related Video
Finance: What is a Bulge Bracket Firm?1 Views
Finance a la shmoop what is a bulge bracket firm? no this has nothing to do [Weightwatchers appears]
with Weight Watchers Oprah or kale...bulge refers to the size of corporate banks
wallets and there are only a few investment banking firms who you know [man holding a wallet]
bulge... that's Goldman Sachs, JP Morgan, Morgan
Stanley and a few others some in Europe some in Asia none in Antarctica
sorry penguins just keeping it real bulge is basically "everything for
everyone" these banks trade in the most obscure derivatives and enable
firms to raise literally any amount of money they want to raise cover every
need in asset management, tax planning, legal coverage and so on everything so
what's a non bulge or niche firm well it's one that specializes in a given
category or service famous example Allen and company specializes in the media [Examples of media business firms]
business Hollywood banking internet media things like tech the firm has less
than 100 people but it's a powerhouse in its domain just one of many specialty
firms the oil industry has its darlings so does tech, those are niche,
this is bulge....and this is a bulge Jenny Craig can you know help with that [Man in taco bell with a bulging tummy]
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