| Line Item | Example Value |
|---|---|
| Cash & equivalents | ₨ 250,000 |
| Accounts receivable (gross) / Collectability | ₨ 180,000 / 95% |
| Inventory (book) / Haircut | ₨ 140,000 / 10% |
| PPE cost / Accumulated depreciation / Market factor | ₨ 900,000 / ₨ 320,000 / 110% |
| Intangibles (book) / Haircut | ₨ 200,000 / 25% |
| Total liabilities (book) | ₨ 775,000 |
| Contingent + off-balance obligations | ₨ 20,000 + ₨ 40,000 |
| Adjusted Net Worth (computed) | ₨ 338,000 |
The core balance-sheet definition is: Business Net Worth = Total Assets − Total Liabilities. This calculator shows both a book view and an adjusted view.
- Book Net Worth: (cash + A/R gross + inventory book + other assets) − (current liabilities + long-term liabilities).
- Adjusted Assets: A/R × collectability, inventory × (1 − haircut), PPE net book × market factor, intangibles × (1 − haircut).
- Adjusted Liabilities: book liabilities + (optional) contingent liabilities + (optional) off-balance obligations.
- Working Capital: adjusted current assets − current liabilities.
- Ratios: current ratio = adjusted current assets ÷ current liabilities; debt-to-asset = adjusted liabilities ÷ adjusted assets.
- Collect the latest balance sheet and supporting schedules (A/R aging, inventory report, fixed-asset register).
- Enter assets and liabilities using book values first to validate totals.
- Set realistic assumptions: collectability for A/R, haircut for inventory, and a market factor for PPE.
- Include contingent or off-balance obligations when you need a conservative view for planning.
- Press Calculate Net Worth to view results above the form.
- Download CSV or PDF to share with partners, lenders, or for quarterly tracking.
Why Net Worth Matters for Decision-Making
Business net worth is the equity cushion that absorbs shocks and supports borrowing. Lenders often compare it with total debt, while owners watch it for long‑term value creation. Updating net worth quarterly helps detect cash leakage, slow collections, and overstocking before they become crises. When you apply conservative adjustments, the result becomes a planning baseline for credit limits, partner buyouts, and insurance coverage discussions. Track the same assumptions to make trends comparable.
Building a Reliable Asset Base
Assets drive the numerator, but not every rupee is equally realizable. Use A/R collectability to reflect aging: many firms model 90–98% depending on customer mix. Inventory often needs a 5–30% haircut for obsolescence, markdowns, and shrink. For PPE, start with cost minus accumulated depreciation, then apply a market factor such as 80–120% to reflect resale demand and maintenance condition. Document your sources for repeatability. Separate one‑time items so they don’t distort comparisons.
Understanding Liability Quality and Hidden Exposure
Liabilities reduce net worth, so completeness matters as much as accuracy. Begin with book current and long‑term balances, then consider exposures that accounting may not fully capture. Contingent items can include pending claims, warranty reserves, or guarantees; model them when probability is meaningful and the amount is estimable. Off‑balance obligations may include committed purchase orders or service contracts. Including these items produces a more cautious view for dividends, acquisitions, and covenant testing.
Interpreting Ratios Alongside Net Worth
Net worth is a snapshot, but ratios explain quality. Working capital highlights liquidity available to run operations: adjusted current assets minus current liabilities. The current ratio is useful when compared over time; a declining trend can signal rising short‑term borrowing or slow collections. Debt‑to‑asset shows leverage; lower percentages generally mean more balance‑sheet flexibility. Equity ratio (net worth ÷ assets) complements it by showing the portion funded by owners versus creditors across cycles.
Using Scenarios to Plan Funding and Growth
Scenario testing turns the calculator into a decision tool. Run a base case, then stress liquidity by reducing collectability by 3–5 points and increasing inventory haircut by 5 points. For expansion plans, model higher PPE market factors if assets are in strong demand, or lower factors for specialized equipment. Compare adjusted net worth against target leverage and minimum working capital. Save exports to create a scoreboard for future budgets and financing negotiations.
FAQs
1) Is this the same as a business valuation?
No. Net worth is assets minus liabilities, based on balance‑sheet categories. Valuation also considers earnings, growth, and market multiples. Use net worth as a conservative baseline, then layer valuation methods for sale, investment, or strategic decisions.
2) What inventory haircut is reasonable?
Start with 5–10% for fast‑moving items, and 15–30% for slow‑moving or seasonal stock. If you have aging or obsolescence reports, align the haircut with expected markdowns and write‑offs.
3) Should owner loans be included?
If the company must repay them, treat owner loans as liabilities. If repayment is truly subordinated or deferred, document the terms and consider modeling a reduced amount for conservative planning.
4) How do I treat leases and commitments?
If lease liabilities are on the balance sheet, enter them under liabilities. For commitments not recorded as debt, enter the expected remaining payments as off‑balance obligations to stress test liquidity and leverage.
5) Why is adjusted net worth lower than book net worth?
Adjustments reduce realizable assets (like A/R and inventory) and may add hidden obligations. The goal is to estimate what you could convert to cash and settle in a downside scenario.
6) How often should I run the calculator?
At least quarterly, and after major changes such as new debt, large equipment purchases, or a big customer loss. Use consistent assumptions so trends reflect operations, not changing inputs.