An entity’s net equity that corresponds to its net assets (total assets– total liabilities), after subtracting the value of intangible assets (such as copyrights, patents, goodwill, and intellectual property). In other words, it is equal to total tangible assets (excluding intangible assets) minus total liabilities.
It reflects an entity’s solvency and financial health. An entity whose total liabilities exceed its total tangible assets is insolvent, and will not be able to meet its obligations, either in the immediate future or on the mid- to long-term.
This measure reflects a “real” net worth figure.
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