Net worth calculation

As the Preference share is also a liability for the Equity and we calculate net worth for the Equity only so that is shall be subtracted.

yes shall be added to networth

Networth:
Equity Share Capital + Reserves + Preference Capital - Miscellaneous Expenditure

It is the total assets of the company less its current liabilities, long term debt, and miscellaneous expenses. Net worth is also known as shareholder's equity or shareholders funds. Net worth includes equity share capital and all reserves (including revaluation reserve) less expenses not written off. It is that part of the company which belongs to the shareholders.

Definition 1

For a company, total assets minus total liabilities. Net worth is an important determinant of the value of a company, considering it is composed primarily of all the money that has been invested since its inception, as well as the retained earnings for the duration of its operation. Net worth can be used to determine creditworthiness because it gives a snapshot of the company's investment history. also called owner's equity, shareholders' equity, or net assets.

Definition 2

For an individual, the value of a person's assets, including cash, minus all liabilities. The amount by which the individual's assets exceed their liabilities is considered the net worth of that person.

Formula for calculating Networth

equity share capital+preference share capital + reserve and surplus + profits - fictitious assets like preliminary expense - losses

net worth = share capital + reserve. Is it correct or not?

When we apply formula Net worth= Equity + Reserves & surplus - Fictitious assets/Misc Exp.

Please tell should we include Long term debt or Long term liabilities also in Net worth?

Deferred tax assets/liability be considerable while computing net worth ??

SIR/MADAM

DOES IT INCLUDE SHARE APPLICATION MONEY PENDING ALLOTMENT

yes prefrence  share capital would be included

Looses will deducted from Networth Calculation?

Hi Pawan,

Yes, Losses need to be deducted while computing Net Worth of a company.

yes while calculating net worth of a company Deferred Tax Assets and Deferred Tax Liability as it shall be required to pay tax so that should be considered, as it shall be paid to the govt. and shareholders have not right

Net  worth  is define  under section 2( 57)  of the Companies act  2017  , so please refer .