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Company Worth Formula:
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Company worth, also known as net worth or shareholders' equity, represents the value that would be returned to a company's shareholders if all assets were liquidated and all debts paid off. It's a fundamental measure of a company's financial health.
The calculator uses the basic accounting equation:
Where:
Explanation: This fundamental accounting equation must always balance, where the company's assets equal the sum of its liabilities and shareholders' equity.
Details: Calculating company worth is essential for investors, creditors, and management to assess financial stability, make investment decisions, secure financing, and evaluate business performance over time.
Tips: Enter total assets and total liabilities in USD. Both values must be positive numbers. The calculator will compute the company's net worth instantly.
Q1: What's the difference between company worth and market capitalization?
A: Company worth (book value) is based on accounting records, while market cap is based on stock price and represents what investors are willing to pay for the company.
Q2: What are considered assets?
A: Assets include cash, accounts receivable, inventory, property, equipment, investments, and intangible assets like patents and trademarks.
Q3: What are considered liabilities?
A: Liabilities include accounts payable, loans, mortgages, bonds payable, accrued expenses, and other debts owed to creditors.
Q4: Can company worth be negative?
A: Yes, if liabilities exceed assets, the company has negative net worth, indicating financial distress.
Q5: How often should company worth be calculated?
A: Public companies calculate it quarterly, while private companies typically do it annually. More frequent calculation may be needed during financial restructuring.