net worth of a company
This query is : Resolved
Prateek Biyani
(Querist)
22 November 2007
What do you mean by 'net worth of a company' ? Is it includes only equity share capital or preference share capital also.
S.RAVICHANDRAN
(Expert)
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
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
OTHERWISE IT IS TREATED AS EQUITY.
EQUITY /PREF. SHARE CAPITAL + FREE RESERVES- MISC. EXP. TO THE EXTENT NOT WRITTEN OFF = NETWORTH.
R.V.RAO
Message likes :
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22 November 2007
Net Worth from Equity Shareholders = Equity + Reserves - Miscellaneous Expenditure.
GULAB SINGH
(Expert)
04 February 2010
Please advise whether Revaluation reserve will be taken in calculating net worth of a company or not
Thanks
Thanks
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