Net Tangible Assets (NTA) is the total assets of a business, less any intangible asset such as goodwill, patents, and trademarks, less all liabilities. Your NTA will determine your maximum revenue (MR) that you can earn in the coming year.
Note that the following assets are NOT counted in the calculation:
- personal furniture
- investments or shares in companies that aren’t publicly listed
- investments values using equity accounting methodology
- units in trusts that are not publicly listed
- trade or barter dollars
- assets assured to another licensed entity
- boats, ships, jet skis, planes, helicopters, racehorses and racing cars
- collectors’ items such as paintings, stamps, coins
- contingent assets
- unvested superannuation benefits
- life or income protection insurance policy benefits
By keeping Geoff’s assets healthy and allowable, he has an NTA of $250,000 which would provide for a maximum revenue of more than $5.6 million. This was sufficient to satisfy his anticipated projects for the next 12 months.
Note: These are real case studies of clients we’ve worked with, though we have changed their names to protect their privacy.
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