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Business Worth Formula:
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Business net worth represents the value of a business calculated as the difference between total assets and total liabilities. It provides a snapshot of the company's financial health and overall value at a specific point in time.
The calculator uses the fundamental accounting equation:
Where:
Explanation: This calculation provides the book value of your business, representing what would remain if all assets were sold and all liabilities paid off.
Details: Knowing your business worth is crucial for selling the business, seeking investors, obtaining loans, strategic planning, and understanding your company's financial position relative to competitors.
Tips: Enter total assets and total liabilities in USD. Include all tangible and intangible assets, and all short-term and long-term liabilities for accurate calculation.
Q1: What counts as business assets?
A: Assets include cash, accounts receivable, inventory, equipment, property, vehicles, intellectual property, and investments owned by the business.
Q2: What are considered business liabilities?
A: Liabilities include loans, accounts payable, mortgages, credit card debt, taxes owed, and any other financial obligations the business must pay.
Q3: Is this the same as market value?
A: No, this calculates book value. Market value may be higher or lower based on factors like brand reputation, customer base, and future earning potential.
Q4: How often should I calculate my business worth?
A: Regularly, at least quarterly, to track financial progress and make informed business decisions.
Q5: What if my business worth is negative?
A: A negative worth means liabilities exceed assets, indicating financial distress that requires immediate attention and strategic planning.