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New worth.

How is net worth calculated?

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Under what scenarios is new worth greater than the difference between Total Assets and Total Liability?

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panda ketteringUK
By ketteringUK
08th Nov 2019 16:05

NOT YOU AGAIN MR CEO?????!

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A Putey FACA
By Arthur Putey
08th Nov 2019 16:17

DIPAK RAJGOR wrote:

Under what scenarios is new worth greater than the difference between Total Assets and Total Liability?


when new worth is worth more than old worth?
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By DIPAK RAJGOR
08th Nov 2019 16:18

Hi! How are you?
Just a heads up: I will be posting again at 14.32 on 25th November 2019. Now please make a note and don't be late! Have a nice day.

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By WhichTyler
08th Nov 2019 16:22

Ask Donald Trump, he (like the late Robert Maxwell) seems to have found a way of not counting the pesky 'liabilities' side of things...

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By johnhemming
08th Nov 2019 18:06

This is quite a confused question. A company has accounts and a balance sheet. However, the value of the company is substantially driven by what people are willing to pay for the company. That is influenced by the assets minus liabilities, but is a different figure.

Net Worth (for a company) can be the difference between assets and liabilities often at the values in the balance sheet which are not necessarily valued. Net worth (for an individual) will tend to use market values.

Enterprise value is something else that can be used to measure the value of a business
https://www.investopedia.com/terms/e/enterprisevalue.asp

Much that I am a tech entrepreneur and I recognise that one can develop a business successfully in tech initially without revenue, in the long term a business has value that depends on how much profit is made (as companies like WeWork and Uber are finding out).

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Replying to johnhemming:
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By DIPAK RAJGOR
08th Nov 2019 18:17

Thank you John, I am indebted to you for the clarity of your answer.

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Replying to johnhemming:
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By Clinton Lee
10th Nov 2019 21:07

johnhemming wrote:
... in the long term a business has value that depends on how much profit is made...

Value depends on a lot more than just profit!

What if the company has valuable IP that is not currently contributing to the bottom line? What if there's a high net asset figure?

Large companies may have value because of their first mover advantage or having a large share of the market (even if they are not making a profit).

When it comes to actually selling a company there are further considerations - the quality of the advisory firm assisting the sale, the number and quality of buyers they attract, the adviser's skill and finesse at building competitive tension...

And then there are value adds. You can make a deal more attractive to investors, and push up the "value", in a number of ways (offering seller financing, taking on additional risk on yourself through the indemnities and guarantees, for example)....

Value of public firms is clear - it's in their share price. For privately held firms there is no one value. And any value is not based just on profit. It really annoys me when I see these formulae out there on easy ways to value a business - the "take your profit and multiply by 5" kind of nonsense.

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Replying to Clinton:
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By DIPAK RAJGOR
10th Nov 2019 21:20

Thank you so much for your time and comments. Much appreciated.

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Replying to Clinton:
Hallerud at Easter
By DJKL
10th Nov 2019 23:22

Slight issue with last point, markets do not always price correctly, their share price is their share price, their share value may be higher or lower, beauty being in the eye of the beholder.

Everyone has their own approach re quoted share valuation be that P/E, Div yield mixed in to Gordon Model, observing free cashflow, considering debt/interest cover metrics or even, heaven forbid, chartists etc- if we all valued on the same basis there would not be a market.

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Replying to DJKL:
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By Clinton Lee
11th Nov 2019 11:00

DJKL wrote:

Slight issue with last point, markets do not always price correctly, their share price is their share price, their share value may be higher or lower, beauty being in the eye of the beholder....


The efficient-market hypothesis is a whole different subject and would make for an interesting discussion. But this, I suspect, is not the ideal thread in which to have an EMH conversation. ;)
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By JDBENJAMIN
09th Nov 2019 14:00

Your question is just babble. Are you ever going to actually spend money on an accountant rather than leech off us?

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Replying to JDBENJAMIN:
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By DIPAK RAJGOR
09th Nov 2019 14:49

Hi,
How are you today? I think I will continue as long as there are decent folks willing to help. Have a nice day.

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Replying to DIPAK RAJGOR:
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By thestudyman
10th Nov 2019 08:20

DIPAK RAJGOR wrote:

Hi,
How are you today? I think I will continue as long as there are decent folks willing to help. Have a nice day.

You were advised in a previous thread to get an accountant in June 2019 (and other threads) and you said you would. What happened?

Why are you so determined to do this all by yourself?

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Replying to thestudyman:
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By DIPAK RAJGOR
10th Nov 2019 11:24

Happy Sunday!,
My reasons will be very obvious to anyone, except you, it appears.
So Mr. "Studyman" what else do you study apart from me?
I suggest you study something more meaningful and productive.
Have a nice day.

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Psycho
By Wilson Philips
10th Nov 2019 22:13

DFTT

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Replying to Wilson Philips:
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By DIPAK RAJGOR
11th Nov 2019 11:22

Hi, Agree and noted.

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