The Income|Outcome^® Contextuary

A Balance Sheet balancing the ‘Net Assets’ (Total Assets less Liabilities) against the Equity.

It looks at what the business owns and what it owes — and highlights the difference. This value, called net assets, is what belongs to the business after all obligations are met.

Unlike the traditional balance sheet that separates liabilities and equity, the Net Asset Balance Sheet focuses on the organization’s net position. It’s a useful way to see how much value the business holds — and to track how that value changes over time.

The Net Asset Balance Sheet has advantages for measuring management performance, and at one time, it was prevalent outside North America.

“What do you mean by that?”

There have been various forms of the Net Asset Balance Sheet:

1. Total Assets less Liabilities balances Net Assets (i.e.Equity) (upper illustration)
2. Total Assets less Current Liabilities balances combined total of Long-Term Liabilities plus Equity. (lower illustration)
3. Total Assets less non-Interest Bearing Liabilities balances against the combined total of Interest-Bearing Liabilities plus Equity. (not illustrated)

Any term which uses the phrase ‘net asset’ or ‘net assets’ must be examined closely. See Net Asset.

See also Total Asset Balance Sheet.

For a DIY Net Asset Balance Sheet Calculator, go here.