In calculation, net assets are close to equity: both show what remains for owners after debts are paid off. The methodology for determination is established by regulations and may slightly differ from the balance sheet value of capital.
The indicator has direct legal significance. If a company's net assets fall below its charter capital, the law provides for certain consequences—up to an obligation to reduce the charter capital or make a liquidation decision. A negative value means liabilities exceed assets.
In collective investments, the term is applied differently: the net asset value of a fund divided by the number of shares determines the price per share. The result of management is assessed by its change.
For investors, net assets are useful as a verification metric. Their decline despite formally profitable operations indicates distributions beyond earnings or recognition of losses not reflected in the main result, and requires explanation in the issuer's reports.