Dear all
Please let me know the difference between net current assets and net worth if any company want to takeover another co. what should we should another co.’s net worth or net current assets?
5 Replies
AMIT MISHRA
(Legal Professional)
(393 Points)
Replied 11 October 2011
Hi Pankaj,
Net current assets refers to the difference between current assets and current liabilities it refers to the amount required for day to day activities of Company while net worth refers to the shareholders equity, owners equity and net current assets. The net worth is to be taken into account in any form of Corporate restructuring.
Also refer to the attached file for meaning of net worth. Feel free to ask for further clarification.
Thanks & Regards
Amit Mishra
Attached File : 617238 848333 net worth.pdf downloaded: 227 times
ashisha
(Practising CA)
(261 Points)
Replied 11 October 2011
net worth= total assets- external liabilities
or
equity share capital+prefrence sh capital+reserves n surplus(including profit) - miscellaneous expenditure not written off (prelim exp, deferred rev exp, etc.) - p & l account Debit balance
Pankaj Arora
(Learner)
(3134 Points)
Replied 11 October 2011
but at the time of takeover we should see net worth or net current assets of another co. for purchase consideration amount?
ashisha
(Practising CA)
(261 Points)
Replied 11 October 2011
net worth is a better measure to judge the market value of any business. it is a much broader concept than net current assets.
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