Net assets
Encyclopedia
Net assets, sometimes referred to as net worth
, is the shareholders' equity = assets minus liabilities. The term net assets is commonly used with charities or not for profit entities -- a measurement of their ability to reinvest profits toward their mission.
In "Return On Net Assets" (RONA) it's often fixed assets plus net working capital
(current assets minus current liabilities), which may be slightly less than total assets.
If net assets are negative, then an entity is balance sheet insolvent.
Net worth
In business, net worth is the total assets minus total outside liabilities of an individual or a company. For a company, this is called shareholders' preference and may be referred to as book value. Net worth is stated as at a particular year in time...
, is the shareholders' equity = assets minus liabilities. The term net assets is commonly used with charities or not for profit entities -- a measurement of their ability to reinvest profits toward their mission.
In "Return On Net Assets" (RONA) it's often fixed assets plus net working capital
Working capital
Working capital is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Net working capital is...
(current assets minus current liabilities), which may be slightly less than total assets.
If net assets are negative, then an entity is balance sheet insolvent.