How to Calculate Your Tangible Net Worth (Formula)

by Msnbctv news staff

Your web value, fairly merely, is the greenback quantity of your belongings minus all of your money owed. You may calculate your web value by subtracting your liabilities (money owed) out of your belongings. In case your belongings exceed your liabilities, you should have a constructive web value. Conversely, in case your liabilities are larger than your belongings, you should have a detrimental web value.

For sure functions, nevertheless, this primary web value calculation will not be enough. For those who maintain copyrights, patents or different mental property (IP), it’s possible you’ll must calculate your “tangible” web value, which is the sum of all of your tangible belongings minus the overall quantity of your liabilities.

Key Takeaways

  • Tangible web value is the sum whole of 1’s tangible belongings (these that may be bodily held or transformed to money) minus one’s whole money owed.
  • The formulation to find out your tangible web value is: Complete Belongings – Complete Liabilities – Intangible Belongings = Tangible Internet Value.
  • Calculating your tangible web value entails totaling all of your belongings—money, investments, and property—and totaling all of your secured and unsecured debt, after which subtracting the latter from the previous.

What Is Tangible Internet Value?

Your tangible web value is just like your web value in that it totes up your belongings and liabilities, nevertheless it goes one step farther. It subtracts the worth of any intangible belongings, together with goodwill, copyrights, patents and different mental property.

Companies, for instance, calculate tangible web value to find out the liquidation worth of the corporate if it had been to stop operations or if it had been to be bought. This determine may also be necessary to people who’re making use of for private or small enterprise loans, and the lender calls for a “actual” web value determine. Your lender could also be taken with your tangible web value as a result of it offers a extra correct view of your funds—and the way a lot the lender might recoup if it needed to liquidate your belongings if you happen to defaulted on their mortgage.

You may wish to calculate your tangible web value to quantify how you’re doing financially, or to judge your monetary progress over time.

Tangible Versus Intangible Belongings

The distinction between web value and tangible web value calculations is that the previous contains all belongings, and the latter subtracts the belongings that you just can not bodily contact. Belongings are every thing that you just personal that may be transformed into money. By this definition, belongings embrace money, investments, actual property (land and everlasting buildings, similar to houses, connected to the property), and private property (every thing else that you just personal similar to vehicles, boats, furnishings, and jewellery). These are your tangible belongings: They’re all issues that you may maintain. (Strictly talking, investments are monetary belongings, not tangible ones. However as a result of they are often transformed to money, they’re typically put within the tangible class for functions like this.)

Intangible belongings, however, are belongings you can’t maintain. Goodwill, copyrights, patents, logos and mental property are all thought-about intangible belongings since they can’t be seen or touched regardless that they’re worthwhile. If you’re promoting your small enterprise, you could possibly rightly argue that these intangible belongings add worth to the enterprise. Nevertheless, within the case of figuring out tangible web value as a part of the mortgage course of, the financial institution could solely take into account these belongings which are tangible as a result of they may very well be extra simply liquidated.

Calculating Your Tangible Internet Value

The formulation for calculating your tangible web value is pretty simple:

Tangible Internet Value

start{aligned}&textual content{Tangible Internet Value}&quad=textual content{Complete Belongings}-text{Liabilities}-text{Intangible Belongings}finish{aligned}

Tangible Internet Value

To calculate your tangible web value, you need to first decide your whole belongings, whole liabilities and the worth of any intangible belongings:

Complete BelongingsComplete LiabilitiesWorth of Intangible Belongings
Money and money equivalents



Actual property


Private property




Secured liabilities – auto, mortgage, residence fairness loans, and so forth.

Unsecured liabilities – bank cards, medical, scholar and private loans, and so forth.





Mental property


Different IP





Calculating your web value is a multi-step course of. Earlier than you begin, resolve if you wish to calculate web value individually (you) or collectively (you and your partner/companion). Additionally, get all of your monetary statements (similar to financial institution statements and bank card statements) in a single place.

The primary time you calculate your web value will in all probability take the longest. As soon as you determine the methodology and learn how to worth your belongings, nevertheless, the method will possible take much less time. This is a step-by-step method.

Calculating Belongings

The primary hurdle to appropriately decide the worth of your belongings. Start with essentially the most liquid ones, the quantity you might have in money and money equivalents, together with:

Subsequent, transfer on to investments, figuring out their present market worth. These embrace:

  • Annuities
  • Bonds
  • Life insurance coverage money worth
  • Mutual funds
  • Pensions
  • Retirement plans—IRA, 401(okay), 403(b)
  • Shares
  • Different investments

Subsequent up: actual and private property—tangible belongings. Bear in mind, actual property contains land and something that’s completely connected to it, similar to a home. Private property is every thing else. Embrace:

  • Collectibles—antiques, artwork, cash, and so forth.
  • Family furnishings
  • Residence expertise
  • Jewellery
  • Main residence
  • Rental properties
  • Trip or second residence
  • Automobiles: vehicles, boats, bikes

Add ’em all up—the money/money equivalents, investments, and actual/private property. The sum represents your whole belongings.

Calculating Liabilities

Your liabilities are comparatively simple to quantify since they symbolize your whole excellent money owed, and also you possible obtain month-to-month statements or reminders for them. These statements are based mostly on precise numbers—not estimates—and present precisely what you owe.

Begin off with the quantity you owe in secured money owed, together with:

  • Automotive mortgage(s)
  • Residence fairness mortgage
  • Margin loans
  • Mortgage
  • Rental actual property mortgage
  • Second mortgage
  • Trip/second residence mortgage

Then transfer on to the quantity you owe in unsecured money owed, together with:

  • Bank card debt
  • Medical payments 
  • Private loans
  • Pupil loans
  • Different debt and excellent payments

Add secured money owed and unsecured money owed. The sum represents your whole liabilities.

A Internet Value Spreadsheet

Upon getting decided the worth of all of your belongings and the dimensions of all of your liabilities, you should use the formulation Tangible Internet Value = Complete Belongings – Complete Liabilities – Intangible Belongings) to find out your tangible web value. A pattern worksheet is proven under.

BelongingsPresent WorthLiabilitiesQuantity
Money and Money Equivalents Secured Liabilities 
Certificates of deposit Auto loans 
Checking account Residence fairness line 
Cash market account Margin loans 
Bodily money Mortgage 
Financial savings account Rental mortgage 
Treasury payments 2nd residence mortgage 
Investments Unsecured Liabilities 
Annuities Bank card debt 
Bonds Medical payments 
Life insurance coverage money worth Private loans 
Mutual funds Pupil loans 
Pensions Different debt and payments 
Retirement plans  
  Complete Liabilities 
Actual Property   
Main residence   
Second residence Intangible Belongings 
Rental properties Copyrights 
Boats Goodwill 
  Mental Property 
Private Property Patents 
Collectibles Logos 
Family furnishings   
Jewellery Complete Intangible Belongings 
Complete Belongings   
 Complete Belongings  
 – Complete Liabilities  
 – Complete Intangible Belongings  
 Tangible Internet Value  

Suggestions for Calculating Internet Value

Having organized data is extraordinarily useful and can assist velocity up the online value calculation. For instance, if all of your necessary monetary statements are stored in a single file cupboard (or file in your laptop), you’ll have the ability to discover the mandatory data shortly. In case your data aren’t organized but, now is a superb time to start out.

When you’re at it, create a “Internet Value” file (once more, in your file cupboard or in your laptop) the place you possibly can preserve all of your web value statements for comparability. The underside line is it’ll be simpler (and extra enjoyable) to calculate your web value regularly if you do not have to search out each piece of data.

The Backside Line

Your tangible web value is the same as the worth of your whole belongings, minus any liabilities and intangible belongings together with copyrights, goodwill, mental property, patents, and logos. Whereas a regular web value calculation (belongings minus liabilities) will suffice for most people, those that maintain intangible belongings could also be required to calculate their tangible web value to fulfill a lender’s necessities for a private or small enterprise mortgage.

Even if you happen to plan on utilizing one of many many on-line instruments or apps to calculate your web value, it’s a good suggestion to do it your self at the least as soon as—you’ll get essentially the most out of the numbers that manner. Whereas you should use pencil, paper, and a calculator, a spreadsheet program like Microsoft Excel or Google Sheets can do the maths for you and cut back the prospect of any math errors.

As with all web value calculation, putting correct values on belongings is vital. Many people and companies desire to solicit the recommendation of certified professionals when valuing intangible belongings.

Investopedia requires writers to make use of major sources to assist their work. These embrace white papers, authorities information, unique reporting, and interviews with business specialists. We additionally reference unique analysis from different respected publishers the place applicable. You may be taught extra concerning the requirements we comply with in producing correct, unbiased content material in our
editorial coverage.
  1. Company Finance Institute. “Tangible Belongings.” Accessed Sept. 13, 2021.

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