Accounting Tutorials

- Assets
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- Net Assets
- Book Value of Asset
- Fixed Assets Accounting
- Net Asset Formula
- Assets Formula
- Net Fixed Assets
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- Cash and Cash Equivalents | Examples, List & Top Differences
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- Current Assets
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- Current Assets Formula
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- Accounts Receivables? | Definition, Accounting Examples
- Is Account Receivable - An Asset or Liability?
- Accounts Receivable Examples
- Accounts Receivable Process
- Is Accounts Receivable an Asset?
- Accounts Receivable - Debit or Credit?
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- Recourse in Factoring
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- Net Realizable Value Formula
- Trade Receivables
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- Allowance for Doubtful Accounts
- Accrued Revenue
- Accrued Revenue Examples
- Deferred Revenue Expenditure
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- Liquid Assets
- Liquid Assets Examples
- Financial Assets
- Financial Assets Examples
- Financial Assets Types
- Quick Assets
- Marketable Securities on the Balance Sheet | Top Examples
- Marketable Securities Examples
- Non-Marketable Securities
- Trading Securities in Balance Sheet
- Prepaid Expenses
- Prepaid Expense Examples
- Prepaid Insurance
- Intangible Assets List
- Tangible vs Intangible Assets
- Net Tangible Assets
- Tangible vs Intangible
- Contingent Asset
- Tangible Assets
- Deferred Tax
- Deferred Income Tax
- Deferred Tax Assets
- Capital Expenditure (Capex)
- Capex Calculation
- Capital Expenditure Examples
- Write-Off
- Capex vs Opex
- Salvage Value
- Residual Value
- Working Capital Management Importance
- Working Capital Examples
- Working Capital Loan
- Fixed Capital vs Working Capital | Top 8 Differences (Infographics)
- Impariment of Assets
- Goodwill
- Goodwill Formula
- Goodwill Amortization
- Goodwill Impairment Test
- Intangible Assets
- Intangible Assets Examples
- Negative Goodwill
- Goodwill Valuation
- Capitalized Interest

- Accounting Basics (80+)
- Bookkeeping (52+)
- Balance Sheet (30+)
- Liabilities (68+)
- Shareholders Equity (91+)
- Income Statement (158+)
- Cash Flow Statement (17+)
- Accounting Careers (26+)
- Accounting Books (8+)
- Budgeting in Finance (31+)

Related Courses

**Formula of Net Asset (Table of Contents)**

## What is Net Asset Formula?

Net Asset can be defined as the total assets of an organization or the firm, minus its total liabilities. The number of net assets can be tallied out with the shareholder’s equity of a business. One of the easiest ways to calculate net asset is using below formula (accounting equation).

The formula for Net Assets is:

**Net Assets Formula = Assets – Liabilities**

### Explanation of Net Asset Formula

The formula for the calculation of Net Assets is quite simple and is easy to understand. We need to cover below three steps and then we will be having Net Asset value.

**Step 1:**First, we need to calculate the total of assets which is the right side of balance sheet. One can also take a total of assets or if only trial balance is available then we need to add assets one by one and then have a grand total of assets.**Step 2:**After step 1, we can in similar fashion calculate the total of liabilities that the firm is required to pay or is obliged somewhere in the future. Like step 1, one can add line by line liabilities and get a total of liabilities. Total liabilities can include total borrowings, provisions, current, and other non-current liabilities.**Step 3:**In the last step, we need to just deduct the total calculated in step 1 which is total assets from total liabilities which was calculated in step2.

### Examples of Net Asset Formula (with Excel Template)

Let’s take an example to understand the calculation of the net asset equation in a better manner.

#### Example #1

**PQR ltd is in a stage of finalizing its books of accounts and the MD of the company wants to know what their net asset is. Below is the information extracted from their trial balance, you are required to calculate Net Asset.**

**Solution:**

So, the calculation of net asset can be done as follows

Well, this is a straight forward example of calculating net asset. We can use below formula to calculate net assets:

Net Assets Formula = $10,500,000 – $5,500,000

Net Asset will be –

**Net Assets = $5,000,000**

Hence, the Net assets of PQR ltd are $5,000,000.

#### Example #2

**HDFC bank one of the leading banks in the industry and one of the best banks operating in India. Sam who is a lead analyst at CRISIL is looking for a new opportunity and his one of the criteria for stock screener is that the company’s net asset should not be negative nor zero.**

4.9 (1,067 ratings)

**Below extract from BS (reported in cr.) for the period ended 2018.**

**You are required to assess whether an above stock will make up in Sam’s screener list?**

**Solution:**

Here we are given a few variables from the liabilities side and few variables from the asset side. First, we need to calculate total assets and then total liabilities.

**Step 1:** Calculation of Total liabilities

**Step 2:** Calculation of Total assets

**Step 3:** We can use the above equation to calculate net assets:

Net Assets Formula = 11,03,232.77 – 9,93,633.64

Net Assets will be –

**Net Assets = 1,09,599.13**

Therefore, the net assets of the HDFC bank for March 2018 were 1,09,599.13 which would compromise of equity and reserves.

#### Example #3

**Kedia broker and the company are following TATA motors one of the listed companies of NSE. TATA motors have been recently suffering from decline sales of its most sold product Jaguar Land Rover and hence its shares have been declining since then. Aman who is working at Kedia ltd. wants to know the net assets of the company first.**

**You are required to calculate the net assets of the company.**

**Solution:**

Here we are given a few variables from the liabilities side and few variables from the asset side. First, we need to calculate total assets and then total liabilities.

**Step 1:** Calculation of Total liabilities

**Step 2:** Calculation of Total assets

**Step 3:** We can use the above equation to calculate net assets:

Net Assets = 3,52,882.09 – 2,57,454.18

Net Assets will be –

**Net Assets = 95427.91**

Therefore, the net assets of the TATA motors for March 2018 were 95,427.91 which would compromise of equity and reserves.

### Net Asset Formula Calculator

You can use the following Net Asset Formula Calculator

Assets | |

Liabilities | |

Net Asset Formula | |

Net Asset Formula = | Assets – Liabilities |

0 – 0 = | 0 |

### Relevance and Uses

Assets net of the total liabilities will net to the owner’s equity. Essentially, the shareholders or the stockholders of the firm or the company or the business owns the assets which shall not have outstanding loans. This would be the same as home with a mortgage loan upon it. The equity or the net assets in the home is the value of the home and subtracting the outstanding mortgage loan. Net assets are a similar concept.

If desired, owners can increase their net assets in a few several ways. They can make new investments in the firm or in the company or the management or the owners can simply leave excess profits in the bank account of the company rather than calling for distribution or dividend. If owners or shareholders or stockholders withdraw money out of the business say in the form of a distribution or dividend, their nets assets shall decrease. The ratio of liabilities to total assets shall go up as the owners took out the cash which is part of an asset, from the firm or the business.

### Recommended Articles

This has been a guide to Net Asset Formula. Here we discuss how to calculate net asset using its formula along with practical examples and downloadable excel template. You can learn more about excel modeling from the following articles –