Guide to Analysing Companies

Asset class
See asset allocation.
Asset cover
The number of times that a company’s debt is covered by its
net assets. This is usually expressed as a ratio and is arrived
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ASSET COVER
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at by subtracting the value of intangible assets, current
liabilities and all debt from the book value of its assets.
Asset cover is used to determine how large or small a cushion
shareholders enjoy if a company gets into trouble or has to be
wound up.
Asset management
The art of getting the best return possible from the (largely fi-
nancial) assets that an individual or institution may own. This
involves finding the ideal balance between the return to be
gained from income and capital growth and the risk of
putting too many eggs in one basket. The maturity and liq-
uidity of assets must usually match those of any liabilities.
Achieving the best balance has led to the growth of the more
recent but equally arcane science of liability management.
Asset management account
An account with a bank or financial institution that combines
run-of-the-mill banking services (such as a current
account and credit or debit cards) with those usually
provided by a stockbroker (such as the ability to buy and
sell securities, sometimes with borrowed money). A boon for
users is that such accounts also provide regular statements that
give a combined breakdown of all transactions. In the United
States, they are also known as central asset accounts.
Asset stripper
A term coined in the 1960s for a corporate raider who acquired
a company on the cheap and made a profit by peeling off and
selling the various bits (subsidiaries, property, plant and equip-
ment, and the like). The exercise often involved laying off many
workers. The opportunity arises most commonly when the
stockmarket places a low valuation on the company, either