How to Calculate Change in Spontaneous Assets
Spontaneous assets are items such as accounts receivable that tend to change more or less automatically in the normal course of business operations. Typically, changes in spontaneous assets are proportional to changes in the level of sales. Knowing how to calculate changes in spontaneous assets is useful to estimate how much money is required to support projected sales growth or for a proposed business expansion.
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Instructions
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Obtain a copy of the company balance sheets for the beginning and end of the period for which you wish to calculate change in spontaneous assets. You can find the annual balance sheet in a company's annual report (for most publicly owned companies the annual reports are available on their websites). For interim periods (every quarter, for example) you may need quarterly update reports.
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Look in the assets section of the balance sheet for items such as accounts receivable, inventory and prepayment for services or products. Add the amounts of these items for the beginning and end dates of the period you are measuring to find the total starting and ending spontaneous assets.
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Subtract the starting spontaneous assets from the ending spontaneous assets. This is the change in spontaneous assets in dollars.
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Convert the change in spontaneous assets in dollars to a percentage. Divide the change by the starting spontaneous assets and multiply by 100. For example, if the initial spontaneous assets totaled $7.5 million and the change was $1.5 million, divide $1.5 million divided by $7.5 million, and then multiply by 100 for a percentage change in spontaneous assets of 20 percent.
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Tips & Warnings
Don't assume growth in spontaneous assets always indicates growth in sales. That's the normal pattern, true. However, other factors can change the picture. For example, during an economic downturn, it's common for accounts receivable and especially inventories to grow even though sales may be down.
