Posted in Finance, Accounting and Economics Terms, Total Reads: 97
Definition: Spontaneous Assets
Spontaneous Assets are the assets that get collected according to the sales of the firm. They are tangible and increase due to rise in the business activity. They grow in proportion with the sales. It is a part of spontaneous financing as it flows according to the everyday sales of the business.
Unlike different sources of financing like loans or bonds, they require no external assistance. Account payables and accruals are a form of spontaneous financing. Spontaneous liabilities also increase or decrease with change in sales.
For a company, it is important to project the spontaneous assets as they are directly related to the sales of the company. An example can be the inventory or the payment for a service that has already been delivered. They need to evaluate the decision to borrow additional funds hence it is always advisable to evaluate various resources available and needed by the company for its daily business activities.