How to determine the value of the net assets

The size of the net assets of the company – an indicator of its ability to perform its obligations and to pay dividends. In fact, it is the value of its capital less all debt. The value of the net assets is calculated according to the balance sheet for each accounting period and allows to monitor the dynamics of development of the company as its financial departments, and interested investors and partners.

So, what does the term "net assets"? Excluding debt obligations are summarized all of the assets of the company, namely the value of its balance sheet assets. However, the calculation involved, not all assets will be deducted the cost of the own shares that have been repurchased from shareholders and not taken into account the liabilities of the founders of the share capital on making another installment.

From the amount of liabilities (debt) should be excluded data points "Reserves on doubtful debts" and "deferred Income" of the balance sheet.

Thus, the General formula for calculating the value of the net assets of the company as follows:Net assets = (Section I + Section II – ZSA - Zouk) – (Section IV + V Section - DBP), where:• Section I – the sum total for Section I of the balance sheet "Current assets";• Section II – total of Section II of the balance sheet "current assets";• the PFA is the sum of the costs of the company to repurchase its own shares for cancellation or resale;• ZUK is the sum of the debts of the founders of Charter capital contributions;• Section IV – total of Section IV of the balance sheet Long-term liabilities;• Section V - total of the Section IV of the balance sheet "current liabilities";• DBP – deferred revenues.

This formula is universal for different forms of companies: joint stock companies, insurance companies, credit organizations, limited liability companies, investment or mutual Fund etc. However, there are differences, for example, in the timing of reporting: joint-stock companies are obliged to provide the index value of the net assets at the end of each quarter, a limited liability company of the year.