Net assets
Net assets equal total assets minus total liabilities; by the accounting equation this figure always equals total equity, so it summarises an owner's stake in the business.
See it move
A balance sheet shows total assets of €68,000 and total liabilities of €31,000, so net assets are €68,000 − €31,000, or €37,000. That figure always equals total equity, confirmed here by €20,000 of share capital plus €17,000 of retained earnings, which also sum to €37,000.
The formula
Variables
- Net assets (€)
- Total assets (€)
- Total liabilities (€)
- Total equity (€)
The balance-sheet identity: net assets always equal total equity, because assets equal liabilities plus equity.
Check yourself
A company reports non-current assets of €95,000 and current assets of €26,000. Current liabilities are €14,500 and non-current liabilities are €31,500. If the company's issued share capital is €48,000, what are its retained earnings?