How to calculate net worth of company

there are two method for calculating net worth

1)share capital+reserve & surplus

2) Asset - Liability

Revaluation reserve should not be taken into account in calculation of networth 

i dont gat what is pl reserve. 

hi Valji,

Could you please enlist the type of assets & liabilities  that are considered while calculating the net worth of a Company?

Further, is it only free reserves that would be included in the 1st method or all types of reserves and surplus would be included?

Thanks

Reshmi

Well the net worth of the company is nothing but the amounts belonging to the shareholders. It should include share capital (equity and preference) and free reserves (reserves which can be distributed by way of dividend).

Or you can take the assets net of specific reserves created against them (like fixed assets need to be netted off against the revaluation reserve) less liabilities due to outsiders for the calculation of net worth.

check this link for your answer

/experts/net-worth-calculation-13251.asp

Net Asset Value is considered as NET WORTH of a COMPANY . 

Share Capital(Oridinary+Prefrence)+Reserves+ Retained Earnings 

RESERVES AND SURPLUS + SHARE CAPITAL - PRELIMINARY EXPENSES (WRITTEN OFF DURING THE YEAR)

Net worth of a company is calculated by subtracting Net liabilities from Net Assets. Net Worth is the amount belonging to the shareholders. Net Worth can be Calculated by two methods :

1. Assets - Liabilities

2. Share Capital + Reserves and Surplus

Free reserves are added while calculating net worth. Yes, you can Add Profit and Loss reserve as it is a free reserve. Revaluation reserve will be net off while valuing assets.

As  per  companies act  2013  section 2 sub clause (57)  

Net  worth =  Aggregate value of paid up share capital  +  Reserve created out of profit + securities premium + Debit or  Credit balance of profit & Loss account - accumulated losses - deferred expenditure - Mics  expenditure  not  written off as per the audited balance sheet .

Does  not  include  reserve  created out of revaluation of asset , write back of depreciation and amalgamation 

Net worth can be calculated by reducing the total liabilities from the total assets. Or it can also be calculated by adding paid up share capital and reserves

Net worth can be calculated from balance sheet from the following equation. Net Worth= Equity + Reserves & surplus - Fictitious assets/Misc Exp.. Net worth includes equity share capital and all reserves (including revaluation reserve) less expenses not written off.