Net Assets

What Does Net Assets Mean?

Net assets is the difference between assets and liabilities and is a term used by non-profit organisations instead of owner’s equity or stockholder’s equity.

How it Works

A business will have assets. 

These are things the business owns—or money owed to the business.

​A business will also have liabilities. 

This is money owed to others.

The difference between assets and liabilities is known as net assets.

Net assets equals equity.

This is  how much money the business owes to the owners or stockholders.

Theoretically, assets should show how much the business could recoup if assets were sold and customer debts were paid.

Liabilities show what is owed to others.

Net assets shows what is left over—or net worth.

© R.J. Hickman 2020