To find the average assets on a balance sheet, you will first need the total assets from at least two different periods, typically the beginning and the end of the accounting period you are analyzing.
The formula to calculate average assets is:
Average Assets = (Beginning Total Assets + Ending Total Assets) / 2For example, if the beginning total assets of a company were $500,000 and the ending total assets were $600,000, you would add those two amounts together to get $1,100,000. Then, divide that sum by 2, which gives you an average assets figure of $550,000.
This average provides a useful measure for comparison with other financial metrics, such as return on assets, as it smooths out fluctuations and gives a more stable figure over time.