The net worth of a business is also known as its book value, or as its owners' (stockholders') equity.
As with any net worth calculation, placing accurate values on assets is critical. Your tangible net worth is equal to the value of all of your assets, minus any liabilities and intangible assets including copyrights, goodwill, intellectual property, patents, and trademarks. Once you have determined the value of all your assets and the size of all your liabilities, you can use the formula Tangible Net Worth = Total Assets - Total Liabilities - Intangible Assets) to determine your tangible net worth. THE CERTIFICATION NAMES ARE THE TRADEMARKS OF THEIR RESPECTIVE OWNERS. The sum represents your total assets. Intangible assets, on the other hand, are assets you cannot hold. These are your tangible assets: They are all things that you can hold. As per the latest balance sheet of the company, the total assets of the company included accounts receivables of $500,000, inventories of $1,500,000, net fixed assets of $1,000,000 and cash at bank of $50,000, while the total liabilities included trade payables of $300,000 short-term debt of $1,000,000 and term debt of $1,100,000. Intangible assets -- such as a business' brand name, patents, or goodwill. Here's a step-by-step approach.

The Ascent is The Motley Fool's new personal finance brand devoted to helping you live a richer life. Let’s take an example to understand the calculation of Net Worth Formula in a better manner. However, in the case of determining tangible net worth as part of the loan process, the bank may only consider those assets that are tangible because they could be more easily liquidated.
It subtracts the value of any intangible assets, including goodwill, copyrights, patents and other intellectual property.

However, even if the balance sheet isn't available, you can still calculate a business' net worth if you have some basic financial information. Before you start, decide if you want to calculate net worth individually (you) or jointly (you and your spouse/partner).

Total assets comprise all that can generate future cash inflow, which includes fixed assets, trade receivables, prepaid expenses, etc. Net worth is the value of the assets a person or corporation owns, minus the liabilities they owe. Let us take the example of a company GHJ Ltd. which is engaged in the business of synthetic rubber manufacturing.

Total liabilities include all types of future payment obligations like term debt, short-term borrowing, trade payables, etc. These include: Next up: real and personal property—tangible assets. Even if you plan on using one of the many online tools or apps to calculate your net worth, it’s a good idea to do it yourself at least once—you’ll get the most out of the numbers that way. Market data powered by FactSet and Web Financial Group.