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What is the 'Non-Current Assets to Net Worth' Ratio?

The non-current assets to net worth ratio will give the analyst an idea of how much of a company’s value is tied-up in non-current assets.

As a quick refresher, ‘non-current assets’ are those that most likely will not convert to cash within a year’s time, also known as a long-term asset.

Where a company’s non-current asset to net worth ratio lies depends on the industry, but generally speaking a company wants to avoid having that ratio rise above 1 to 1.5. That means the company is highly illiquid, and could be vulnerable in the event of an economic shock.

Keywords: assets, liquidity, ratios, net worth, illiquid, economic conditions, non-current assets,