Abstract
Asset management, as defined in the ISO 55000 standard, enables organizations to realize value from its asset. One of the stated benefits of asset management is increased financial performance. Based on standard financial statement analysis, the paper will explain how asset management on physical assets can improve the financial performance of the organization. The paper will then propose specific measures of asset intensiveness based on data from financial statements. Organizations can use these measures to evaluate the potential impact physical asset management can have on their financial performance. Finally, the paper will present the results of a new survey of asset intensiveness grouped by industry sector. The survey is based on data from all financial statements with end of period in the year 2014 of all Danish companies. In total 187,184 financial statements published in XBRL-format, have been analysed in the survey.
1 Introduction
Asset management, as defined in the ISO 55000 standard, enables organizations to realize value from its asset in the achievement of its organizational objectives. Whereas assets in the ISO standard can be both tangible or intangible, financial or non-financial, assets in this paper refer to physical assets. Whereas value in the ISO standard depends on what constitutes the organizational objectives, value in this paper refers to financial value. One of several potential organizational benefits of asset management, stated in the ISO 55000 standard, is to increase financial performance.
7 Conclusion
It is concluded that the financial statement is a good and valid source for organizations who wants to conduct an initial assessment of the potential impact physical asset management can have on the organizations financial performance.
Using the methodologies of financial statement analysis, the financial performance of an organization is linked to physical asset management as well as to the three measures of asset intensiveness of a company. The empirical studies of financial statements gives support to the usefulness of these measures, and it is concluded that the three measures of asset intensiveness have a linkage to the potential impact on financial performance of the organization from asset management.
