How To Calculate Average Total Assets?

Calculating total assets is essential, and not all that difficult. This is the accounting term that refers to the amount of assets currently owned by a company at a given time no matter what kind of assets they are. Whether it’s property, cash, or accounts receivable, everything counts when calculating average total assets. The first thing to do is to decide on the period of time you want to use to calculate average total assets. You’ll probably want to choose 12 months so you are well organized. After this, you need to collect all of your financial statements relating to the company.

The next thing to do is to write down the total assets number, found on one of the company’s balance sheets for the end of one year. This will be ‘ending December 31st.’ You’ll then need the March 31st balance sheet, from which you will require the total assets number from that date. Repeat that for June 30th and September 30th, and December 31st of the next year, and you’ll be ready for the next step.

After this, all that remains is to add up the five total assets figures. The final step, you will have to calculate the average of all these numbers. You’ll need to divide the final figure that you receive by adding up all the figures by the amount of figures that have been added up. This result will be your average total assets the average amount of that the company will currently own in cash or other asset forms within a year.

Average total assets are calculated in much the same way as you calculate the normal average. To calculate the average total assets for a year, first add the beginning and ending values for average total assets for that year and then divide the resultant value by 2. The beginning value for the year can be taken as the last year’s ending total asset. For example for a two year period, it will be calculated as follows:  Total assets (this year) + total assets (previous year)      2  Here you can change the denominator with the number of periods.