Shareholders' equity and net tangible assets are listed in a company's balance sheet and respectively express the company's net worth and underlying value. Shareholders' equity is calculated including intangible assets, such as goodwill and patents, whereas net tangible assets does not include any intangible assets in its calculation.
Difference Between Shareholders' Equity and Net Tangible Assets
Shareholders' equity is calculated by subtracting a company's total liabilities from its total assets. Similarly, it could be calculated by subtracting a company's treasury share from its share capital, retained earnings and other stockholders' equity. A company's shareholders' equity indicates the value that a company is financed through investors purchasing common and preferred shares.
Contrary to a company's shareholders' equity, its net tangible assets is calculated by subtracting the company's total liabilities, par value of preferred shares and value of any intangible assets, such as patents, trademarks and goodwill, from its total assets.
Calculating Shareholders' Equity and Net Tangible Assets
For example, as of Sept. 27, 2014, Apple Incorporated has total assets of $231.839 billion, total liabilities of $120.292 billion, goodwill of $4.616 billion, intangible assets of $4.142 billion and does not have preferred stock. Apple also has common stock worth $23.313 billion, retained earnings of $87.152 billion and other stockholders' equity of $1.082 billion. However, Apple does not have treasury stock.
Therefore, Apple has total shareholders' equity of $111.547 billion, or $23.313 billion + $87.152 billion + $1.082 billion. Conversely, it has net tangible assets of $102.789 billion, or $231.839 billion less $120.292 billion, $4.616 billion and $4.142 billion. While shareholders' equity includes Apple's value intangible assets and goodwill, its net tangible assets exclude those values.