The “net tangible asset backing per ordinary share” figure, often abbreviated “NTA”, is one possible measure of the worth of a share, although its usefulness is subject to some reservations. It can be compared to the market value of the share.

In an ongoing company the various measures related to income tend to be more relevant, as the asset backing of a share is not normally available to shareholders unless the company is placed in liquidation or makes a capital return, or unless a takeover offer reflecting this backing is made and accepted.

In any case, a company’s assets are usually much more valuable on a “going concern” basis.

On the other hand, in the case of a company in financial difficulties and facing bankruptcy, the book values used for the assets may turn out to have been too high and not realisable under the fire sale conditions that are then likely to prevail.

Book values can also be too low rather than too high, particularly if assets have not been revalued recently in order to allow for inflation and the costs of replacement.


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If there is only one class of ordinary shares then the “per share” figure is obtained by dividing the company’s adjusted total net assets (gross assets less intangibles) by the total number of ordinary shares on issue.

A low NTA in comparison to the issue price of shares in a float is a prima facie indication that the promoters have been too greedy, at the expense of subscribers to the issue. This greatly increases the risk that these investors will be showing a loss once the new shares are listed.