Net Worth Calculation

Net worth in simple words refers to net assets which imply total assets less total liabilities of the company. In order to calculate net worth of a company one should add Equity share capital, Preference share capital, Reserves and Surplus available with the firm and deduct from this all fictitious assets or intangible items like miscellaneous expenditure, preliminary expenses and so on.

Debts are not considered in the calculation of net worth of the company. It is also called owner’s equity as it does not include outsider’s debt like debentures, long term loan, bank loan etc…., in its calculation. For example of a company have $50000 equity share capital, $10000 preference share capital, $20000 reserves and surplus  and $5000 preliminary expenses than net worth of the company would be $75000 ($50000 +$10000+$20000 – $5000)

0 comments… add one

Leave a Comment


Related pages


law of diminishing utilityhypothecationsexamples of current assets and liabilitiesexample of cash inflowcommand economy disadvantagesdifference between vertical and horizontal analysisadvantages and disadvantages of economic globalizationdefine current liabilitydual aspect concept of accounting with examplesdisadvantages and advantages of social mediacarriage on sales in trading account3 golden rules of accountancyformula of profitability ratiovertical statement analysiswhat is substitution effect and income effectoperating cycle in financedirect vs indirect quotessouth africa mixed economy systemdiminishing balance method of depreciationconglomerate organizationdisadvantages of paybackdisadvantages of privatisationamortization expense journal entryglobalization advantages disadvantagesconsistency concept in financial accountingdefine drawings in accountingfeatures of mixed economy systemdefinition of current assets and current liabilitiesdisadvantages of income statementunitary price elasticity of demandwhat is ecs in bankingwhat are the disadvantages of globalizationdisadvantage of advertisementdisadvantages of variable costingcore product augmented productunitary elastic demand curvewhat is the full form of asbaskimming vs penetration pricingassumption of diminishing marginal utilitytransfer pricing advantages and disadvantagestypes of price elasticity of demand with graphssubstitution and income effect examplesadvantages of marginal cost pricingdefine monopolistic competitionbraeburn capital websitefunctions of derivative marketmarket skimming and market penetration pricing strategiesskimming pricing strategymeaning of drawer and draweeadvantages of currency depreciationmeaning of demonetizationwhat are the problems of barter systemfluctuating capital accountdefine subventione trading advantages and disadvantagesprepaid expenses journal entriescapital budgeting proposalsquota vs tariffthe advantages and disadvantages of social mediadefine complimentary goodsimplications of capmadvantages and disadvantages of horizontal communicationdifference between autonomous investment and induced investmentwho is an autocratic leaderadvantages and disadvantages of convertible bondsexamples of skimmingdisadvantages of organizational structureexamples of horizontal mergersdrawings accounting definitionwhat are the disadvantages of online bankingeconomic growth advantages and disadvantagestariffs vs quotasdifference between demat account and trading accountwhat is an unqualified audit reportfactors influencing income elasticity of demandwhat are the drawbacks of democracyhow does it differ from a mixed economydistinction between micro and macro economics