What Is Shareholders' Equity?
Net assets refer to owner's equity or equity capital. The net asset value of an enterprise refers to the net amount of the enterprise's total assets minus its liabilities. It consists of two major parts. One is the capital that the company originally invested in, including the premium part, and the other is that the company is operating What is created among them also includes donated assets, which belong to the owner's equity.
Basic Information
- Chinese name
- net
- 1 Definition
- 2 net
- net
- net
- I. Accounting for limited net assets
- 1. Carry-over limited income at the end of the period
- 2. Reclassification of limited net assets
- Accounting for non-restricted net assets
- 1. Carry forward non-restricted income at the end of the period
- Transfer donation income, membership income, service income, government subsidy income, merchandise sales income, investment income, other income, etc. to the lenders of the "non-restricted net assets" account.
- 2. Carry-over cost items at the end of the period
- Transfer the cost of business activities, management expenses, fundraising expenses, and other expenses to the debit of the "non-restricted net assets" account.
- 3. Reclassification of limited net assets
- When the restriction on restricted net assets has been lifted, the net assets should be reclassified.
- (1)
- The net asset value per share is the book value of each share, and this value reflects the shareholders' actual equity in the company's assets. Its formula is:
- ( Total assets-Total liabilities) / Number of ordinary shares
- In theory, after the company sells all its assets and pays off all its liabilities, the net asset value is the amount that shareholders can get back. However, we must note that since the stocks of listed companies are freely traded in the stock market, their stock prices can be higher or lower than the net asset value per share.
- Generally speaking, if the stock price is lower than the NAV per share, the stock can be bought; on the contrary, if the stock price is much higher than the NAV per share, the stock cannot be bought. However, it is not enough to make buying and selling decisions based on this value. We should also consider the company's profit prospects at the same time.