# Net Tangible Assets

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## Definition of 'Net Tangible Assets'

Net tangible assets (NTA) is a measure of a company's financial health that excludes intangible assets such as goodwill and patents. It is calculated by subtracting intangible assets from total assets.

NTA is important because it provides a more accurate picture of a company's financial position than total assets. Intangible assets can be difficult to value, and they can often be overstated. By excluding intangible assets from the calculation, NTA provides a more realistic view of a company's ability to generate cash flow.

NTA is also used as a valuation metric for companies that are being acquired. In general, companies with higher NTA are considered to be more valuable than companies with lower NTA. This is because NTA is a measure of a company's underlying assets, which are what ultimately generate cash flow.

There are a few things to keep in mind when using NTA as a valuation metric. First, NTA can be misleading if a company has a large amount of debt. Debt is a liability, and it reduces the amount of equity that a company has. This means that a company with a lot of debt may have a lower NTA than a company with a similar amount of assets but less debt.

Second, NTA can be misleading if a company has a lot of intangible assets. Intangible assets can be valuable, but they can also be difficult to value. This means that NTA may not be a good measure of a company's value if it has a lot of intangible assets.

Overall, NTA is a useful metric for assessing a company's financial health. However, it is important to keep in mind the limitations of NTA when using it as a valuation metric.

* NTA is sometimes referred to as "tangible net worth" or "net book value."
* NTA is calculated using the following formula:

```
NTA = Total Assets - Intangible Assets
```

* Intangible assets include items such as goodwill, patents, and trademarks.
* NTA can be used to compare companies with different amounts of intangible assets.
* NTA can also be used to track a company's financial health over time.

Net tangible assets is an important metric for understanding a company's financial health. However, it is important to keep in mind the limitations of NTA when using it as a valuation metric.

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