Net Tangible Assets (NTA): Definition, Calculation, and Examples

What are net tangible assets?

Net tangible assets (NTA) measure the physical (tangible) resources a company owns after removing intangible assets and liabilities. NTAs focus on items that can be touched or readily valued on the balance sheet—property, plant, equipment, inventory, cash, and receivables—while excluding assets without physical form such as goodwill, patents, trademarks, and copyrights.

NTAs are often reported as a company’s book value or net asset value (NAV) and are used to assess liquidity, solvency, and borrowing capacity.

How to calculate net tangible assets

Basic formula:
NTA = Total assets − Total liabilities − Intangible assets (including goodwill)

Step-by-step:
* Start with total assets (from the balance sheet).
* Subtract total liabilities (current and long-term).
* Subtract intangible assets (goodwill, patents, trademarks, etc.).

Example:
If Total assets = $1,000,000; Total liabilities = $100,000; Goodwill = $100,000
Then NTA = $1,000,000 − $100,000 − $100,000 = $800,000

Net tangible assets per share

You can express NTA on a per-share basis to compare companies within the same industry:

NTA per share = Net tangible assets ÷ Number of outstanding common shares

Example:
NTA = $1,000,000 and Shares outstanding = 500,000 → NTA per share = $2.00

This per-share measure is most meaningful when comparing firms with similar business models and asset structures.

Why NTA matters

• Provides a conservative view of a company’s asset base by excluding intangible or hard-to-value assets.
• Useful for lenders and investors assessing collateral value and downside risk.
• Can improve the accuracy of some ratios (for example, return on assets) when intangibles would otherwise distort the denominator.

Limitations and industry considerations

• Usefulness varies by industry. Firms with large intangible asset bases (software, biotech, media, certain service companies) may show low NTAs despite strong economic value.
• NTAs reflect accounting/book values, which may differ from market values, especially for long-held physical assets or for companies with significant off-balance-sheet items.
• Comparing NTA or NTA per share is most valid among peers in the same sector.

Real-world examples

Amazon (example year-end figures)
* Total assets: $321.2 billion
Total liabilities: $227.8 billion
Goodwill: $15.01 billion
NTA ≈ $321.2B − $227.8B − $15.01B = $78.39 billion

Meta (example year-end figures)
* Total assets: $133.4 billion
Total liabilities: $32.3 billion
Intangible assets: $0.894 billion
* Goodwill: $18.7 billion
NTA ≈ $133.4B − $32.3B − $0.894B − $18.7B ≈ $81.5 billion

Key takeaways

• Net tangible assets isolate a company’s physical, tangible resources by removing liabilities and intangibles.
• NTA and NTA per share are useful for assessing collateral value and downside protection, but their relevance depends on industry asset structures.
• Always compare NTA metrics to industry peers and consider market values and context when making decisions.

Sources

U.S. Securities and Exchange Commission, Form 10-K filings for Amazon.com, Inc. and Facebook, Inc. (Meta).