Net Worth Calculations & Solved Example ( CAIIB)

Net worth in simple words refers to net assets which imply total assets less total liabilities of the company. In order to calculate net worth of a company one should add Equity share capital, Preference share capital, Reserves and Surplus available with the firm and deduct from this all fictitious assets or intangible items like miscellaneous expenditure, preliminary expenses and so on.

Debts are not considered in the calculation of net worth of the company. It is also called owner’s equity as it does not include outsider’s debt like debentures, long term loan, bank loan etc


Given a firm has the following financial figures in its balance sheet, what is its net worth?
  • Capital: Rs 12 lac
  • Reserve: Rs 4 lac
  • Unsecured loan: Rs 5 lac
  • Current assets: Rs 16 lac
  • Pre operative expenses: Rs 2 lac

Hence: Net Worth = Capital + Reserve - Pre-operative Expenses
                              = 12 Lac + 4Lac − 2Lac
            Net Worth = 14Lac


Download the FREE app from Google Play store: JAIIB Practice Exams Lite - More than 10K + Satisfied customers
Download the FREE CAIIB app from Google Play store:Click here 
Download FREE Banking terms and interview questions explained for competitive exams: Click here
Follow us on Facebook for more updates: TutionCentral - CAIIB/JAIIB

Previous Post
Next Post
December 2, 2015 at 9:14 AM

The caiib pro app is not being able to be purchased kindly arrange an alternative way sir
I will be glad to pay the money

January 2, 2016 at 9:50 AM This comment has been removed by the author.
January 2, 2016 at 9:53 AM

I doubt your explanation that debt is not considered for calculation of net worth. It is ridiculous