What are Net Assets?

Assets are anything which the firm owns or has title to (in other words ownership of). The term net then means all assets net of liabilities. Net assets are therefore:-
NET ASSETS = Total Assets - Total Liabilities

The total assets are made up of fixed assets (plant, machinery and equipment) and current assets which is the total of stock, debtors and cash.
The total liabilities are made up in much the same way of long-term liabilities and current liabilities.

The net assets figure therefore can be used as a measure of the value of the business. It is the value of everything the business owns after all the debts have been taken account of. For more detail of how this can be used as a measure of the value of a business try going to the theory section of the worksheet below.