Formula of net assets on the balance sheet. How to calculate net assets on a balance sheet: formula. Calculation of net assets of LLC: formula

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

There are a fairly large number of financial indicators that can characterize how effective the business model of a commercial firm is. These include net assets. This indicator may be of interest to an investor, partner, creditor, it is also useful for company managers responsible for its development. How is the value of net assets calculated in modern Russian companies? What credentials can be used?

What is Net Assets?

Let's first study the essence of the term in question. Net assets are a financial indicator, which is defined as the difference between all the assets of the organization (LLC or JSC), which are accepted for accounting, and liabilities, also taken into account in accounting. At the same time, the determination of figures for each of the components of the net asset formula is carried out, as a rule, based on the provisions of regulatory legal acts, as well as various orders and letters from government departments. But there are also formulas for calculating this indicator, determined in the scientific and expert environment. But,before examining them, it is useful to study in what structure the company's net assets can be represented.

Net Asset Structure

As we noted above, the indicator in question is calculated as the difference between the actual sum of all assets and liabilities. In accordance with the point of view widespread among Russian economists, the former should include:

• non-current assets represented by fixed assets, intangible resources, construction in progress, long-term investments;
• current assets represented by various stocks, receivables, short-term investments, VAT on purchased inventory items.

At the same time, experts recommend excluding the company's expenses for the purchase of shares in order to sell them or withdraw them from the market, as well as the founders' debts for payments to the authorized capital, from the composition of current assets. In turn, the structure of liabilities must contain:

• long-term and short-term corporate loan liabilities;
• accounts payable;
• reserves relating to future expenses;
• debts to the founders for the transfer of income.

Also, the formula of net assets, based on the considered structure of those, implies the inclusion in the first and second indicators of any other information that can be classified in one way or another as the firm's resources or its liabilities. Above, we noted thatVarious legal acts can be used as sources of methodology that can be applied to calculate the financial indicator in question. Thus, one of the main existing regulatory legal acts regulating the calculation of net assets is the Order of the Ministry of Finance dated August 28, 2014 No. 84n. Let's consider how to calculate net assets (the formula for determining them, in fact, is also presented in the specified NLA) is proposed by the Ministry of Finance.

Determination of net assets using the method of the Ministry of Finance

The Chief Financial Office recommends defining the indicator in question in the following way.

Firstly, the company needs to sum up all of its recorded assets and liabilities. At the same time, data on off-balance accounts, according to specialists of the Ministry of Finance, should not be taken into account.

Secondly, the formula of net assets according to the method of the Ministry of Finance of the Russian Federation assumes the exclusion from the assets of such indicators as the debts of the founders (shareholders, owners) for payments to the authorized capital or shares (in this sense, the position of the Ministry of Finance coincides with the approach of experts, which we discussed above), from liabilities - deferred income, which is associated with state support, as well as the gratuitous receipt of any property.

One more nuance of determining the value of net assets in accordance with the methodology under consideration - both parameters of the formula for their calculation should be calculated based on the cost, which is reflected in the balance sheet. In this case, the formula for calculating netassets, proposed by the Ministry of Finance, is generally similar in concept to other approaches common among economists, which also involve the use of figures from the balance sheet. Let us now study how the indicator under consideration can be calculated in practice.

How is net worth calculated in practice?

The formula for calculating net assets, in principle, has a very simple structure. The main thing is to have access to the numbers that are used in it. The main source of such, as we noted above, is the balance sheet of the organization. If we take the corresponding accounting document in the format in which it is approved in Russia, then information about the assets of the company is contained mainly in line 1600, about liabilities - in lines 1400 and 1500.

At the same time, if we follow the recommendations of the Ministry of Finance of the Russian Federation and subtract from the first debts of the founders for payments to the authorized capital, from the second - deferred income, then we will also need accounting data that reflects the value of the first indicator (as a rule, this is the debit of the account 75), as well as numbers on line 1530 (for the second parameter).

Thus, the net asset formula will be applied according to a certain algorithm. Let's study it in detail.

Net Asset Formula: Structure and Scheme

1. First of all, we subtract from the figure on line 1600 the indicator reflecting the debts of the founders to the company for contributions to the authorized capital.
2. After we summarize the indicators for lines 1400 and 1500 of the balance.
3. Next subtract fromthe resulting result number on the line 1530.
4. The final step will be to subtract from the figure obtained by subtracting the amount of debt from 1600, the indicator obtained after the last calculation.

How can the net asset formula look like a schematic? Let's agree to abbreviate the indicator under consideration as NA, the balance sheet lines - STR, accounting accounts - SC.

As a result, the formula for calculating net assets on the balance sheet will look like this:

NA=(STR 1600 - MF 75) - (STR 1400 + STR 1500 - STR 1530)

Having studied how the corresponding financial indicator is calculated, let's consider how it can be applied in practice.

What is the practical meaning of net assets?

The value of net assets is one of the key indicators of the effectiveness of a company's business model. The main criterion here is the positive or negative value of the corresponding indicator. In the first case, it is legitimate to talk about the company's profitability and its high investment attractiveness. In turn, if the formula for net assets on the balance sheet showed a negative result, most likely the company has certain problems.

How to interpret net assets correctly?

Much in the interpretation of this indicator depends on the specific stage of business development. For young companies, start-ups, negative values are not as critical as for businesses present on the marketlong time. For firms that are present in high-margin segments, a negative net asset figure is also acceptable, but again, it is desirable that it be short-lived.

It is useful to observe such an indicator as net assets in dynamics over several years. Or, using data from current accounting, track it monthly or quarterly.

Net assets as a business management factor

The results of net asset calculations have a certain meaning in terms of business management. For example, calculating the net assets of an LLC (the formula for the respective companies and JSCs will be the same) can be useful:

• in cases where the authorized capital is increased through the property of the LLC;
• when the company buys back securities from shareholders, when one of the LLC participants leaves the business;
• when paying dividends to co-founders of the company;
• when reporting to investors;
• when analyzing the effectiveness of the company's business model at the request of the owner;
• as an additional source of data on the financial condition of the company when considering loan applications by the bank or in the course of interaction with potential investors.

Thus, the calculation of the indicator in question is useful both from the point of view of the organization's reporting to stakeholders, and in the aspect of the implementation of the analytical work of managers aimed at optimizing business processes.

After considering howcalculate net assets according to the balance sheet (the formula used for this was also studied by us), it will be useful to pay attention to a number of terminological nuances associated with the practical use of the corresponding indicator as a characteristic of the financial position of an enterprise.

Net assets or equity?

So, for example, some experts believe that the term in question should be identified with the concept of equity. There is another point of view on this thesis. As for the normative regulation of economic processes, in the relevant Russian legal acts, these two concepts are generally considered very similar or identical.

For example, Federal Law No. 226 dated 2011-18-07 states that for banking organizations, not net assets should be calculated, but just the same own funds in the manner that is recorded in the regulatory legal acts issued by the Central Bank of the Russian Federation. Another noteworthy source of law is Bank of Russia Letter No. 350, issued on 1996-28-10. It states that net assets are an indicator that corresponds to the concept of a bank's own capital.

Thus, as regards credit and financial institutions, the concepts in question should be considered as identical. Therefore, according to some researchers, approved in the same Order of the Ministry of Finance No. 84n and used to calculate such an indicator as the net assets of an LLC, the formula, in principle, can also be used to determine the amount of a company's equity capital. Which, in turn, is also the most important indicatorbusiness performance.

There is a term that is very close in sound to the one under consideration - “net current assets”.

What is net current assets

Under the net current assets means the amount of the company's own capital (that is, in one of the interpretations - the same net assets), as well as long-term liabilities reduced by the amount of non-current assets. Some experts define this indicator as the difference between the total amount of the firm's assets, which are classified as current, and the sum of all those liabilities of the company, which are short-term.

What net current assets show

Net current assets - an indicator that is most often used to assess the financial and economic stability of a company in terms of whether it has the resources to pay off current debts, as well as invest in expanding production. The term in question has another common name - net working capital.

Thus, an investor, considering the prospects for investing in a particular company (for example, in an LLC), can also pay attention to net current assets. The formula for calculating those can be supplemented by those that are used to determine the amount of equity capital. The higher both indicators, the more attractive the firm can be for investment.