Why net worth is known as shareholder's equity?


2 Answer(s)


1. Total Liability is Rs.20,00,000
2. The only thing that shareholders own in a company are the left over assets after paying of any liabilities. This is given by the formula (Assets - Liabilities) - and this is nothing but net worth / net assets. Hence Shareholders equity = Net Worth

3. Share capital is any money that the company gets by selling its shares. Share capital can come from both promoters and investors.

4. Its mostly a current asset, since it is used up immediately.

because networth is used to pay shareholders dividends