Thursday, June 11, 2009

Net Worth of Business

How do you find the net worth of a business?

Generally, assets are not the net worth of a business. The net worth of a business equals share capital plus retained earnings. This in turn is equal to assets less liabilities other than share capital plus retained earnings.

The share capital and retained earnings represent the value of property rights at their historic cost and the assets less other liabilities represent the property owned less claims on the property owned assets.

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