net worth of a company

This query is : Resolved 

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.

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


22 November 2007 Net Worth from Equity Shareholders = Equity + Reserves - Miscellaneous Expenditure.

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

Thanks



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