A surplus asset earns no return of the business, The business is likely to be paying the cost of capital repect of the moeny tied up in the asset, that is the money which it can relise by selling it.

If the surplus asset is sold, the business may be able to invest the cash released in more productive ways or alteratively it may use the cash to cut its liabilities. Either way,it will enhance the return on capital employed for the business as a whole.

Although selling surplus asset yields short-term benefits, the business should not jeopardise its activities in the medium or long term by disposing of productive capacity until the likelihood of it being required the future has been fully assessed.