22 November 2007
Though Preference share capital is owed by the company to its holders on its liquidation, it also forms part of the Capital structure.
Hence Networth = Equity Share Capital +
PReference Share Capital + Free Reserves . This is Liability side approach. In the Asset side approach it is = Fixed Assets ( NET BLOCK) + Working Capital
22 November 2007
PREF. SHARES WITH REDEMPTION PERIOD BEYOND 12 YEARS ARE TREATED AS DEBT. OTHERWISE IT IS TREATED AS EQUITY. EQUITY /PREF. SHARE CAPITAL + FREE RESERVES- MISC. EXP. TO THE EXTENT NOT WRITTEN OFF = NETWORTH. R.V.RAO
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