When financing a company, a banker looks at two kinds of assets. Which are they?

• A. Tangible and intangible
• B. Current and fixed
• C. Liquid and illiquid
• D. Real and financial

Answer: (A)

The main idea is how assets are categorized by physical form. When a banker evaluates financing, they distinguish between tangible and intangible assets. Tangible assets are physical items with clear market value and easier-to-verify collateral, like machinery, equipment, inventory, property, and vehicles. Intangible assets, on the other hand, are non-physical but can still hold value, such as patents, trademarks, goodwill, brand value, software, and customer lists. These are harder to value accurately and often harder to seize or liquidate if a loan goes bad, which affects credit decisions and loan terms. The other pairings (current vs fixed, liquid vs illiquid, real vs financial) describe different ways to think about assets, but they don’t capture the fundamental distinction lenders rely on between physical collateral versus non-physical, harder-to-value assets.