Calculation of net assets

The sources of the formation of assets, as you probably know, can serve as the company's own funds , as well as borrowed funds. This is normal practice, and usually borrowed funds even prevail. The problem arises when the borrowed funds start to exceed the value of all the assets of the enterprise, which can happen if the enterprise operates at a loss. In such a case, the risk of the company's non-return to creditors is significantly increased, and the fate of the company can be resolved in court. In order to prevent the occurrence of such a situation and it is necessary to regularly calculate the net assets, controlling their level.

Net assets are assets that are provided by the enterprise's own resources, and their calculation is similar to calculating net profit-you take the initial amount (in our case, the balance currency) and gradually subtract certain indicators until you get the final result.

To begin with, you need to deduct all short-term and long-term liabilities in any form from the balance currency that displays the total amount of both assets and liabilities. The logic here is simple. Since these funds will have to be given out sooner or later, it means that the enterprise will have to part with some of its assets in order to do this. Hence, these assets can not be de facto owned by the enterprise, therefore, when calculating net assets, we subtract them from the total amount.

However, the calculation does not end there. We also need to adjust the value of our assets to the amount owed to the enterprise of its shareholders. Despite the fact that according to the accounting rules, such debts are reflected together with other receivables, for our analysis it is necessary to allocate it. Debt of shareholders can not be considered a net asset, since this asset can not be used to repay the company's debt to external economic entities, and for this purpose, net assets are calculated. Thus, accounting for settlements with founders is a necessary element of our analysis.

Finally, the last thing that needs to be done is to adjust the amount of liabilities by the amount of future income. Despite the fact that the revenues of future periods are considered from the point of view of analytical accounting as a company's obligation, such creditors do not have the right to claim the property of the company. Moreover, the company in this case repays its debt obligations without directly using its assets, by carrying out economic activities. Thus, adding incomes of the future periods, we receive the final sum of pure actives.

The calculation of net assets will show us a very important result, from the point of view of the financial state of the company. As already mentioned, the negative value of net assets can be considered a catastrophe, but even if it is at a positive level, this does not mean that the financial enterprise is stable. In fact, the creditors of the company would like to see as much as possible there. Let's not forget that there is always a risk of depreciation of assets. In addition, not all of them can be transferred to a liquid form, such as cash, for settlements.

Thus, an enterprise should always have a reserve - a financial airbag, which can save it in the event of emergence of critical situations. Calculation of net assets just allows to identify such a reserve, in connection with which the information obtained can be useful not only to external persons, but also to the manager of the enterprise itself.