INTANGIBLE ASSETS

It is an asset that is not physical in nature, such as goodwill, brand recognition, and intellectual property— patents, trademarks, and copyrights. These items are in opposition to tangible assets that has physical substance, such as land, vehicles, equipment, and inventory. Although intangible assets lack the apparent physical worth of a factory 32 or equipment, they can also be advantageous for a company and play a crucial role in determining its future success or downfalls (Kenton, 2022).

The Positive and Negative Aspects of Intangible Assets:

Intangible assets contribute significantly to the value of a company. As the entire world increasingly becomes an interconnected community, the value of intangible assets such as intellectual property, knowledge, and business networks rises.
Intangible assets that are visible to the public can be extremely beneficial for organizations seeking ways to distinguish themselves from competitors. Strong brands, distinctive technologies, or unique intellectual property rights can all help a company boost its commercial appeal, attract prospective consumers, and establish a loyal customer base.
Having intangible assets are capable of significantly improving a company's perceived worth and stability, which impresses investors or shareholders that may result in higher financing or an advantageous appraisal.
Intangible assets, compared to tangible ones, can be traded or licensed to third parties more easily, allowing firms more versatility and the opportunity to diversify into new markets and lines of products.
Patents and copyrights, for instance, may encourage innovation by safeguarding businesses' and individuals' ideas and discoveries, giving an incentive for ongoing investment in advancement of knowledge.

The valuation of intangible assets is a challenging procedure that necessitates an in-depth knowledge of the different techniques, approaches, and assessments. Frequently, owners and growing businesses lack the required abilities, expertise, and funding to carry out these duties and thus, require the assistance of a business analyst or accountant that may charge excessive fees that the business involved may be incapable to afford in the beginning phases.
Intangible assets are prone to infringements by other businesses, which may diminish their value and compel corporations to commit large resources in lawsuits to safeguard them.
Intangible assets, which include copyrights and intellectual property, possess a limited useful life and undetermined future worth.
Intangible assets, as opposed to physical assets, may have minimal collateral value, resulting in it being less feasible for enterprises to obtain funding depending on their value.

ADVANTAGES:

DISADVANTAGES:

CAPITAL STRUCTURE

The capital structure of a company pertains to how it acquires financial resources for its activities and expansion through diverse 25 funding sources like issuing bonds, long-term notes payable, ordinary shares, preferred shares, or retained earnings. It is also known as “financial leverage” and determining the ideal proportion of debt and equity financing is a crucial aspect that every business needs to consider for its smooth operation. Furthermore, financial organizations, including banks and other lending institutions, evaluate the hazards of assisting a company in funding its activities. Hence, in cases where a company seems to have a high degree of leverage, meaning it has considerably more debt than equity, the risk is greater because the company owes more than it earns (Miller, 2019).

How to Strengthen the Firm’s Capital Structure in terms of Asset-Liability Ratio?

The company should increase earnings from sales and profits by means of boosting selling prices, generating more revenue, or cutting costs.

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Since inventory can account for a considerable percentage of a company's working capital, keeping inventory levels above what is required to fill the needs of clients in a timely manner is a waste of cash flow. Thus, enhanced inventory control should be undertaken in order to lower the asset-liability ratio, which optimizes the firm's capital structure

Through employing a particular bottom-line accounting method, the corporation might appear to be in a more favorable financial condition without concern of insolvency

If a business is paying a comparatively high rate of interest on its loans and the present rates are much lower, the business can attempt to refinance its existing debt. This reduces interest-related costs and payments every month, boosting the business's overall profitability and liquidity while also raising its capital resources.

THE INTANGIBLE ASSETS AND CAPITAL STRUCTURE

OF IT COMPANIES WERE ASSESSED USING THE FOLLOWING VARIABLES: