The **Asset Approach** values a business by adding up everything it owns (assets) and subtracting what it owes (liabilities). This approach is often used for businesses with a lot of tangible assets, such as manufacturing companies or real estate businesses. ### Simple Steps: 1. **Add up assets**: Include things like inventory, equipment, and property. 2. **Subtract liabilities**: Deduct loans and debts from the total assets. 3. **Result**: The difference is the value of the business. ### Example: If a toy store owns $100,000 in assets (e.g., toys, computer equipment, shelving, etc.) and owes $20,000 in debts, its value would be $80,000. This method works well for businesses with lots of physical assets, like manufacturing companies, but may not capture the full value of businesses with strong intangible assets, like service or technical companies. See Also: * [[Excess Earnings Approach]] * [[Income Approach]] * [[Market Approach]]