The difference between net assets and total assets lies in the inclusion of liabilities. Total assets represent the full value of all resources a company or individual owns, including cash, investments, property, equipment, and inventory. This figure provides an overview of everything of value that can contribute to wealth or business operations.

Net assets, on the other hand, refer to the value remaining after all liabilities, or debts, are subtracted from total assets. In simple terms, net assets indicate what an entity truly owns after settling its financial obligations. It is calculated using the formula:

Net Assets = Total Assets - Total Liabilities


For businesses, net assets are often referred to as shareholders' equity or owners' equity, reflecting the actual worth of the company that can be attributed to the owners after all liabilities are cleared.

In non-profit organizations, net assets show the remaining resources available for operations after accounting for liabilities and may be classified as restricted or unrestricted based on donor specifications.

In summary, total assets give a comprehensive view of all resources, while net assets offer a clearer picture of an entity’s financial health by showing the amount available once debts are addressed.