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net worth of a company

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(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.
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S.RAVICHANDRAN

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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
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R.V.RAO

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R.V.RAO (Expert)
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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KAAPIL

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KAAPIL (Expert)
22 November 2007 Net Worth from Equity Shareholders = Equity + Reserves - Miscellaneous Expenditure.
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GULAB SINGH

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GULAB SINGH (Expert)
04 February 2010 Please advise whether Revaluation reserve will be taken in calculating net worth of a company or not

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