Net Tangible Assets | Calculate Net Tangible Assets Per Share

Net Tangible Assets is the resultant value derived as the company’s total assets less all intangible assets like patents, goodwill, and trademarks minus all the liabilities and stock or in other words net intangible asset is the total of all the physical assets like plant, machinery, land, buildings, inventories, all-cash instruments, etc.

What are Net Tangible Assets (NTA)?

Net tangible assets is an accounting term, also alternatively known as net asset value or book value. It can be calculated by taking the total assets of a business and subtracting any intangible assets like goodwill, patents or trademarks, par value of preferred stocks and also remove all liabilities to arrive at the figure.

Net Tangible Assets Formula

Net Tangible Assets Formula  = Total Assets  – Intangible Assets – Total Liabilities
Net Tangible Assets

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For eg:
Source: Net Tangible Assets | Calculate Net Tangible Assets Per Share (wallstreetmojo.com)

where,

Net Tangible Assets Example

Suppose Company A has total assets worth $1.5 million on its books, has total liabilities worth$200 million and intangible assets worth $500 million, then after subtracting both of them from total assets, net assetsNet AssetsThe net asset on the balance sheet is the amount by which your total assets exceed your total liabilities and is calculated by simply adding what you own (assets) and subtract it from whatever you owe (liabilities). It is commonly known as net worth (NW).read more would come to $800 million.

Starbucks Net Tangible Assets Calculation

Now that we calculate NTA of Starbucks.

Net Intangible Assets - Starbucks

source: Starbucks SEC Filings

Starbucks (2017)

  • The Total Assets (2017) = $14,365.6
  • Total Intangible Assets (2017) = $516.3 + $1539.2 = $1980.6
  • Total Liabilities (2017) = $8,908.6
  • NTA Formula (2017) = Total Assets (2017) – Total Intangible Assets (2017)  – Total Liabilities (2017)
  •  = $14,365.6 – $1980.6 – $8,908.6 = $3,476.4

Starbucks (2016)

  • The Total Assets (2016) = $14,312.5
  • Total Intangible Assets (2016) = $441.4 + $1,719.6 = $2161.0
  • Total Liabilities (2016) = $8,421.8
  • NTA Formula (2016) = Total Assets (2016) – Total Intangible Assets (2016) – Total Liabilities (2016)
  •  = $14,365.6 – $1980.6 – $8,908.6 = $3,729.7

Significance and Use of NTA

This measure is considered very useful in the analysis of a company’s assets bit their level relevance might be different for any industry one might be dealing with. The relevance of NTA is largely dependent on how important intangible assets are for a specific industry since they are taken away while calculating this measure.

Net Tangible Assets Per Share

This measure is used in place of NTA for a useful comparison of companies operating within a specific industry. This is because different industries tend to have widely varying ratios of tangible assetsTangible AssetsAny physical assets owned by a firm that can be quantified with reasonable ease and are used to carry out its business activities are defined as tangible assets. For example, a company's land, as well as any structures erected on it, furniture, machinery, and equipment.read more and intangible assets, and hence the relevance of this measure differs.

Net tangible assets per share are calculated by dividing the NTA figure by the total number of shares outstanding for a company.

  • Net Tangible Assets per share formula = NTA / Total number of shares

Example of Net Tangible Assets Per Share

In the example, we discussed earlier, if Company A has NTA worth $800 million and has 200 million outstanding shares, NTA per share would work out to $4.00 per share.

Net Tangible Assets Per Share of Starbucks

Net Intangible Assets Per Share - Starbucks

Starbucks (2017)

  • NTA (2017) = $14,365.6 – $1980.6 – $8,908.6 = $3,476.4
  • Total Number of Shares (2017) = 1449.5
  • Net Tangible Assets per Share (2017) = 3,476.2 / 1449.5 = $2.4

Starbucks (2016)

  • NTA (2016) = $14,365.6 – $1980.6 – $8,908.6 = $3,729.7
  • Total Number of Shares (2016) = 1471.6
  • NTA per Share (2016) = $3,729.7 / 1471.6 = $2.5

Net Tangible Assets Video

 

This has been a guide to what is Net Tangible Assets, its formula, example, and calculations. Here we also discuss Net Tangible Assets Per Share and why it is important? You may also go through the recommended articles on basic accounting –

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