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Net Tangible Assets | How to Calculate Net Tangible Assets Per Share? - YouTube
Channel: WallStreetMojo
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hello everyone hi welcome to the channel
of WallStreetmojo watch the video
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till the end also if you are new to this
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clicking the bell icon friends we are
going to learn a concept which is known
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as net tangible assets now this is a
part of a balance sheet this component
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as you can see over here there is a
thing that is visible in front of us net
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tangible assets is your total assets
less your intangible assets now we need
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to first understand what is tangible and
intangible see tangible assets are the
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ones which can be which can be touched
which can be which is visible but in
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case of intangible assets it cannot be
touched nor it is visible but it exists
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so when you deduct from the total assets
the intangible part and the total
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liabilities part you receive your net
tangible assets let's understand this in
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a complete detailed format now first in
foremost thing that we are going to
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learn is what exactly what are the net
tangible assets this is the first
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question NET tangible assets is basically an
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accounting term it is you know
alternatively known as the net asset
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value or it is known as your Book value
which we call as NV or BV so it can be
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calculated by taking your all the total
assets of the business you subtract the
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intangible assets all right for you the
total assets less any intangible assets
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less any liability less liabilities that
will give us your total or your net
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tangible assets net tangible assets
right now intangible assets over here it
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includes something like this like you
know goodwill you have patents your
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trademark
right you have the par value of
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preferred stocks and you know also you
need to remove all the liabilities to
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arrive at this figure now what exactly
is the net tangible assets formula see
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the net tangible assets formula is is
what we have seen over here now here the
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total assets we'll discuss each
component separately the total assets
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over here is the sum total of the asset
side of the balance sheet it includes
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all your current assets over here then
we have the long term liabilities or the
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long term tangible assets we have also
over here intangible assets and
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so-called goodwill right now this was
the part of explanation for the total
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assets now what about intangible assets
which is the second part of our formula
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see this assets are those those ones
which we cannot touch or feel like an
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example goodwill trademark copyright
patents and so on and so forth
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what we need to note here is the is that
that most balance sheet reports goodwill
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separately right and from the
intangible assets so in net tangible
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assets formula do not forget to take the
sum total of both you need to take care
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in that regards the third component is
the total liabilities now the total
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liability this includes you know your
current liabilities and the long-term
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debts right and the other long-term
liabilities so this other part of the
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total liabilities now let's understand
the net tangible assets example let's
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say suppose there's a company called kg
Inc right and it has a total asset which
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is worth let's say 1.5 everything over
here is gonna stay in terms of million
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on its book and has the total
liabilities which is standing closely
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worth 200 million this is 1.5 million in
the
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the assets the total liability is
standing at worth of 200 million and the
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the intangible part is let's say
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standing somewhere close to 500 million
so then after subtracting both from the
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total asset the net asset would stand at
800 million right so let's understand
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this with the help of an example of
Starbucks I'll show you an example over
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there now this is the extract from these
Starbucks or data of 2017 there are a
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couple of detail of total assets over
here current liabilities over here as
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you can see the total assets which is
standing in 14356 so let's do one thing
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let's copy this image and let's practice
this one over here so that we have clear
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idea exactly what we are learning now
the data is right in front of us in
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Excel let's try and calculate a couple
of things the total assets that is
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visible to us which is standing at 14
356 right 365 I'm sorry
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0.6 the total intangible assets
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which is standing somewhere close to we
need to add up two things over here the
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other intangible assets and the goodwill
part so we'll have total amount standing
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at 516.3+1539.2 because we
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have to add with the goodwill amount
also so that comes down to one sorry
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this is not 516 it's 441.4 so that comes down to
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1980.6 and our total
liabilities will be standing
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8908.6 so let's
calculate the Starbucks example over
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here and we'll calculate the net
tangible assets with the help of what we
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have learned well our total assets is
14365.6 right
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we need to deduct any intangible assets
less the total liabilities so
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3476.4 right so this was
the case for 2017 now in the similar
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fashion we'll take the number for 2016
so we have a comparative data the total
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asset that was standing was 114312.5
write the net
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tangible assets will be is equal to 516.3+171
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9.6 and the total liability
will be 8421.8 so
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the net tangible assets is going to be
the total assets less the okay just
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transfer this formula here so 3645.8 and it has reduced
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for 2017 through 3476 so
after learning this example I want you
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to understand what exactly is the
significance of the use of the NTA
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see the measure is considered very
useful in the analysis of company's
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assets but their level of relevance
might be different for any industry now
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one might be dealing with I mean so the
real relevance of the NT is largely
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dependent on how important intangible
assets are for a specific industry since
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they are taken away while calculating
the measure C in case of the oil and gas
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companies or the car manufacturer NT are very are really very high they are high
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because they can secure debt financing
relatively easy by pledging their
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tangible assets second in the tech
sector in the technology company
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intangible assets ITA are pretty high
the they are pretty in the large quantity
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because this results in lower amount of
NTA here because that companies are
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mostly using the software's and and so
on and so forth the other things which
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the intangible portion in tech companies
are really very in the high proportion
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level
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now what we need to learn next over here
is the net tangible assets Per share
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see this measure is used in place of the
NTA that is the NTA
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per share it is useful for comparison of
the companies they are operating within
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a specific industry so this is because
the different industry tend to have
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widely varying ratios of tangible assets
and intangible assets and hence the
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relevance of this measure
absolutely differs so net tangible asset
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assets per share are calculated by
dividing the NTA figures by the total
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number of shares of outstanding for a
company okay so the net tangible assets
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formula will be per share will be the
NTA or share will be is equal to your
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NTA divided by the total number of
shares so this is it for NTA for the
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tangible net enjoyable assets so that's
it for this particular topic if you have
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learned and enjoyed watching this video
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