Net Assets
Total assets minus total liabilities, equivalent to shareholders' equity on the balance sheet.
What is Net Assets?
Net assets is the accounting value of a company equal to total assets minus total liabilities — equivalent to shareholders' equity. For corporations, net assets represents the residual interest of equity holders after all obligations to creditors have been satisfied. It includes paid-in capital, retained earnings, and other comprehensive income. Net assets is commonly used in the context of non-profit organizations, mutual funds, and investment companies, where it serves as the basis for calculating net asset value (NAV). For public companies, net assets is the book value of equity; when divided by shares outstanding, it yields book value per share, a key input in the price-to-book ratio.
Example
A company reports total assets of $5 billion and total liabilities of $3.2 billion on its balance sheet. Its net assets — or shareholders' equity — equal $1.8 billion. This figure includes $500 million in common stock and additional paid-in capital, $1.4 billion in retained earnings, and ($100 million) in accumulated other comprehensive loss. With 200 million shares outstanding, the book value per share is $9.00, which analysts compare to the market price to assess whether the stock trades at a premium or discount to net asset value.