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Company Net Worth Calculator (Section 2(57))
Sort the reserves on the audited balance sheet by how each one arose and see the net worth figure section 2(57) of the Companies Act, 2013 defines, not the shareholders' funds total: for a company asked for its net worth by a lender, a tender committee, a regulator or a filing.
Written by Subham Jhunjhunwala · Reviewed by CA Sundram Gupta ·
From the balance sheet to the statutory figure
Shareholders' funds as the accounts show them₹0
less reserves the definition sets aside₹0
Net worth under section 2(57)₹0
less goodwill and other intangibles₹0
Tangible net worth₹0
Updates as you type. Press Compute for the full computation and the assumptions behind the figures.
Section 2(57) net worth computation
Figures from the audited balance sheet, all at one date. Type 1,00,00,000, or 1cr, or 50L. Leave a line blank if the company has none.Net worth under section 2(57) as at the balance-sheet date
₹0
Tangible net worth₹0after goodwill and other intangibles
Shareholders' funds, for contrast₹0
The computation
Set aside: not part of the figure
Assumptions and flags
Figures as entered from audited accounts; not a certificate.
After the figure
Convert the computation into a certificate
A lender, a tender committee or a registrar does not act on the company's own working. It asks for the same computation drawn from signed audited accounts, examined and signed by a chartered accountant.
What the recipient asks for
They want a net worth certificate for company: the section 2(57) computation with every addition and deduction traced to the audited line it came from, the reserve schedule showing what was set aside and why, the company's name as the register holds it, its CIN, the balance-sheet date, and a UDIN the recipient can verify on the ICAI portal. The figure on this page is the starting point for that work, not a substitute for it.
Compute the figure first. The button to talk to a CA appears with your result.
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What changes between this figure and the certified one
- It starts from signed audited accounts, not from a trial balance or the figures typed here.
- Each reserve is classified from the reserve schedule and the resolution that created it, not from its caption.
- Paid-up capital is confirmed against the register of members and the allotment filings.
- Any modification in the auditor's report is disclosed on the face of the certificate.
- Where the year's accounts are not yet signed, the certificate says the figures are unaudited and to which date they are drawn.
- It carries the CIN, the balance-sheet date and a UDIN the recipient can check on the ICAI portal.
What is being computed
What the calculator counts and why
The Companies Act, 2013 defines a company's net worth in section 2(57). The calculator applies that definition and nothing else, and says so beside the result.
The definition, in plain words
+The paid-up share capital, plus every reserve the company created out of its profits, plus the securities premium account.
−Less the accumulated losses, the deferred expenditure and the miscellaneous expenditure not written off, as the audited balance sheet shows them.
×Reserves created out of a revaluation of assets, out of writing back depreciation, or arising on amalgamation are not counted at all.
So the test for every reserve is how it arose. A reserve built by setting profits aside counts; a reserve that arose from a revaluation, a write-back or a scheme does not, whatever the schedule calls it. That is why the worksheet asks you to sort the reserves rather than type the reserves-and-surplus total.
Audited accounts, one date
The definition reads the figure from the audited balance sheet, so every line should come from the same signed balance sheet, and the result prints the date you give it. A figure assembled from this year's capital and last year's reserves is the first thing a reader sends back.
Leave the date blank and the result says "the balance-sheet date" and asks you to name it before the figure is used.
What the balance sheet shows
Shareholders' funds
Share capital plus the whole of reserves and surplus. Every reserve sits in it, including the ones the definition sets aside, so it is usually the larger number.
What the Act recognises
Net worth, section 2(57)
Shareholders' funds with the revaluation, write-back and amalgamation reserves taken out and the deductions applied. This is the figure a statutory condition means by "net worth".
What many conditions actually name
Tangible net worth
The section 2(57) figure less goodwill and other intangible assets. Where a condition says "tangible", a figure that clears it only because of an intangible will be recomputed by the reader without it.
Sort by origin, not by caption
Reserves it includes, and the ones it excludes
Companies label reserves inconsistently. What decides the treatment is how the reserve arose, which the reserve schedule and the resolution that created it show, not the name on the line.
+
Counted in the figureCapital, premium and anything built out of profits
- Paid-up share capitalEquity and preference, the amount shareholders have actually paid upCounted
- Securities premium accountPremium received on the issue of shares, as the audited balance sheet carries itCounted
- General reserveAn appropriation out of earned profitsCounted
- Retained earnings / surplus in profit and lossUndistributed profits carried forward; a debit balance reduces the figureCounted
- Any other reserve set aside out of profitsWhatever the schedule calls it, if it was built by appropriating profits it countsCounted
A reserve created out of profits counts toward net worth whether or not it is free for dividend. Two such reserves are set by the Companies Act, 2013 itself: the capital redemption reserve, created when shares are redeemed out of profits (section 55), and the debenture redemption reserve, created out of profits available for dividend and used only to redeem debentures (section 71(4)).
×
Set aside by the definitionIn the accounts, outside the figure
- Revaluation reserveAn asset written up without a sale; nothing was realisedExcluded
- Reserve from write-back of depreciationDepreciation reversed into reservesExcluded
- Reserve arising on amalgamationCreated by a scheme or a merger, not by tradingExcluded
- Share application money pending allotmentNot yet paid-up capital, so it does not enter the aggregate; shown separately so the reader can see itNot entered
- A reserve of any other nameRead the resolution that created it: if it arose from a revaluation, a write-back or a scheme it is set aside; if from profits, it countsCheck origin
Each exclusion is identified in the working, so the reader sees what was taken out. Left in, it produces a number the reader can disprove from the same balance sheet.
Where the label misleads
A line called "general reserve" that was in fact credited on a revaluation is still a revaluation reserve for this purpose, and a line with a scheme's name on it that was genuinely appropriated out of profits is not. Read the reserve schedule and the resolution that created the reserve, not the caption.
A revaluation cannot absorb a loss
A revaluation reserve is set aside whether or not the company carries accumulated losses. It is not netted against the losses for this purpose: the losses are deducted in full and the revaluation stays in the memo, which is why the worksheet keeps the two in separate groups.
Against what the reader expects
Reading the result: tangible net worth and the recipient
The same computation is read three ways. Which figure the recipient takes, and what it is compared with, comes from the recipient's own clause, covenant or rule, never from this page.
Lender
Reads the figure beside the rest of the file
A bank assessing a facility reads the statutory net worth alongside borrowings, security and cash generation. A company can meet the net worth line in a covenant and still fall short elsewhere, so the figure is one input to the decision, not the decision.
- Which figure
- Usually the one the sanction letter or covenant names
- What sets the number
- The covenant or the bank's own credit policy
Tender committee
Often names the tangible figure
Eligibility clauses frequently specify tangible net worth, which removes goodwill and other intangibles and produces a lower number. If the figure clears the condition only because an intangible is carried at a substantial value, expect the committee to recompute it without.
- Which figure
- Whatever the eligibility clause says, read word for word
- What sets the number
- The tender document, often as a multiple of the contract value
Regulator or filing
Reads it against its own rule
A registration, licence or return that asks for net worth has its own definition and its own minimum. Where the rule defines net worth differently from section 2(57), the statutory figure is the starting point and the rule's own adjustments follow.
- Which figure
- The one the rule defines; confirm it before relying on this page
- What sets the number
- The regulation or the form's own instructions
Compare it against the number they gave you
The worksheet has a line for the figure the recipient asked for and a choice of which figure they read. Enter both and the result says whether the company's figure clears it or falls short, and by how much. The page holds no threshold of its own: the comparison is only ever against what you typed.
Enter the recipient's figure in the worksheet
A snapshot, not a trend
The result is the position at one balance-sheet date. A lender often asks for the last three audited years and reads the direction as much as the level, so a strong figure after two weak ones tells a different story from three steady ones. Run the computation for each year from that year's audited accounts.
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