What is a company's net assets?
The ultimate goal of entrepreneurial activity is to obtain economic profit. Therefore, the key category that characterizes the efficiency of the company is profit, which is part of the company's net assets. Net assets allow you to assess the financial condition of the organization.
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The net asset value on the balance sheet of an enterprise is the monetary value of a firm's assets less all liabilities.
Data for determining the value of net assets are taken from the balance sheet. According to the order of the Ministry of Finance of the Russian Federation dated August 28, 2014 No. 84n, assets and liabilities taken into account to determine the value of net assets must comply with the requirements of the above standard, as well as the standards of the corresponding RAS.
In this case, the net asset value, according to the formula:
CHA \u003d (A - Ouf - Ra) - (P + T - D);
- NA - net assets
- A- assets
- Ouf - liabilities payable to the authorized capital
- Ra is the company's cost of buying its own shares.
- P - liabilities
- T - transfers
- D - deferred income accepted for accounting;
will be equal to:
12 785 – 12 257 + 18 = 528 (thousand rubles) (an error was made in the report).
The ratio of this indicator with the value of the authorized capital
It is necessary to compare the value of net assets with the size of the authorized capital when calculating dividends that are payable to shareholders.
If the net assets of the enterprise are less than the minimum allowable value of the authorized capital (for LLC - 10 thousand rubles, for CJSC - 10 thousand rubles, for OJSC - 100 thousand rubles), then such a company is subject to liquidation within the time limits established by law.
But the court may decide that the company can continue its activities even with a negative net assets indicator, if there is evidence that the company is viable, and its violations are either insignificant, or their consequences have been leveled.
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Analysis of the state of the net assets of the enterprise
The study of this indicator consists of:
- Monitoring the value of net assets over time. In order to have a complete picture of the financial condition of the enterprise, it is necessary to know the dynamics of this indicator. Based on this information, conclusions are drawn about the factors influencing changes in the value of net assets.
- Estimates of materiality of changes in net assets. As a rule, an increase in the number of net assets is accompanied by an increase in the value of total assets. This means that the turnover of the company is growing. However, the growth of total assets does not always correspond to the growth of net assets (if, for example, financing was carried out from borrowed sources).
- Estimates of the utility of spending net assets. At this stage, the indicators of turnover, as well as profitability, are examined.
The indicator under consideration serves as a basis for analyzing the profitability of the organization, its liquidity and, in some cases, the prospects for its further development. The value of net assets gives management the opportunity to draw conclusions about the solvency of the enterprise, as well as the prospects for diversification (increasing turnover, or opening a new direction).
What is a balance sheet? A sample filling and step-by-step instructions for completing this document are contained
How can this figure be increased?
A firm's net assets can be increased by taking the following measures:
- Control over the debts of the founders.
- Formation of additional capital from the difference between the nominal and real share price.
- Optimization of the structure of fixed assets.
- Increase in capital turnover ratios.
- Increasing the performance of the use of reserves, debts and investments of the company.
Obviously, net assets play a crucial role in analyzing the financial condition of a company.
However, do not forget about other financial indicators.. Only a complete set of financial instruments can provide the user with detailed and reliable information about the organization's solvency.
Thus, the role of the indicator under consideration can hardly be overestimated: it reflects the fulfillment of the main task of entrepreneurial activity - making a profit. The process of calculating this indicator has its own unique characteristics. And its increase can be achieved in different ways.
You can learn about how net assets and company value correlate in the following video lesson:
