What is Tangible Net Worth?

The ratio of debt to tangible net assets is the proportional relationship between total liabilities and tangible net assets, which indicates the degree of protection of corporate tangible net assets to the rights and interests of creditors [1]. This indicator is also one of the indicators used to measure the company's long-term debt service ability.

Debt to tangible net assets ratio

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The ratio of debt to tangible net assets is the proportional relationship between total liabilities and tangible net assets, which indicates the degree of protection of corporate tangible net assets to the rights and interests of creditors [1]. This indicator is also one of the indicators used to measure the company's long-term debt service ability.
Formula for calculating the ratio of debt to tangible net assets
The intangible assets and deferred assets of an enterprise are generally difficult to serve as guarantees for debt repayment. Excluding them from net assets can more reasonably measure the degree of protection of creditors' rights and interests when the enterprise is liquidated. The lower the ratio, the stronger the company's long-term solvency. [1]

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