What is Tangible Net Worth?
Tangible net worth is the actual value of a person’s or company’s assets. Tangible net worth can be determined by taking total assets and subtracting intangible assets and liabilities.
Tangible net worth does not include intangible assets such as patents and trademarks.
Tangible net worth is the value of all the company’s physical assets and cash after deducting all liabilities.
Tangible net worth can also be known as “net tangible assets.”
Tangible net worth can also be called book value. Some people use the term to refer to another business valuation method, but that’s not a common usage.
What is Intangible Net Worth?
Intangible net worth refers to your intellectual property, such as patents, trademarks or copyrights, or to something else that doesn’t have a physical presence but has value because of its reputation or inherent abilities.
Intangible net worth is the monetary value of your intellectual property.
If you own a product or a service that is protected by one or more of these items, you may be able to sell your intangible assets for profit when you no longer need them.
Intangible net worth is part of your net worth, also known as your balance sheet. This term refers to the total amount of your assets minus the total amount of your debts.
The Difference Between Tangible and Intangible Net Worth
Tangible assets include buildings, vehicles and other property that has a physical form. Investments that can be sold for cash have tangible value as well. Intangible assets have no physical form but a monetary value nonetheless. A business may have patents or trademarks that provide it with a competitive advantage over competitors.
These items have no apparent market value but can be sold if needed. Conversely, intangible liabilities have no apparent cost associated with them — until they do — such as lawsuits or taxes owed for which you haven’t set aside sufficient funds to pay them when due.