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

elasticity of demand with exampleslist and describe some advantages of centrally planned economiespenetration pricing strategy pdfsignificance of foreign exchange reserveswhat are vertical mergersunearned revenue journal entry examplesfdi and fii definitionmeaning of direct and indirect expenseswhat is difference between account payable and bills payableadvantages of b2b marketingcash flow statement wikiwho is a consignee and consignordefine operating leasedefine securitizationexample of capital reserveideal cibil scorewhat is dishonour of billfmcg full formwhat are direct quotationsskimming pricesmeaning consigneeexchange rate quotationskimming pricing and penetration pricingtraditional economy country exampleswhat is substitution effectdistinguish between explicit and implicit costwhat is an autocratic leadership stylewhat is the full form of asbaretail vs wholesale definitionmeaning of balance sheet in hindiforfaiting definitionwhat is difference between account payable and bills payablemeaning of fund flowadvantages of monopoliesfull form of cfa courseexplicit cost economicsexample of indirect quotationforfaiting definitiondiversifiable risk and nondiversifiable riskasset revaluation journal entryadvantages of mergerstypes of bill discountingdisadvantages of organizational chartconcept of capmconglomerate diversification strategymeaning of wholesaler and retailersocialist economy advantagesexamples of monopolistic competition productswhat is the difference between direct and indirect laborimplication of capmwhat is an example of a vertical mergerdisadvantages of merger and acquisitionderivatives market pptdirect and indirect quotes in foreign exchange marketabsolute advantage theory of international trade by adam smithexample of conglomeratedisadvantages of traditional bankingcross cheque sampleequity shareholders and preference shareholdersunclaimed dividendsdifference between cash credit and overdraftaccounting and economic profitup selling examplessystematic and non-systematic riskmeaning of skimming pricingadvantages of autocratictraditional economic system advantages and disadvantagescongeneric mergersinterest rate subventionglobalization disadvantagestransfer pricing advantages and disadvantagesprepaid asset journal entrymarket skimming examplewhat is income effect and substitution effectpenetration pricing examplesunearned revenue on balance sheetdisadvantages of carbon credits