Kavan Choksi on the Stock Market and a Company's Value

Estimate a Company's Net Worth with Kavan Choksi

According to Kavan Choksi, determining a company's net worth is one way to make an informed decision when you buy stocks. This strategy helps you identify companies with many potentials and those overvalued that should be avoided.

However, knowing a company's market value is only a part of the equation, as it only describes what the company's value means to investors. It's also important to know the company's net worth. This is the net value of all its assets after paying all its liabilities.

In this blog post, Kavan Choksi shows how to estimate a company's net worth.

First, you should review the company's balance sheet. Then, list their assets or the items of value. These may include cash, accounts receivable, investments, and inventory.

Next, measuring the company's intangible assets can also help you estimate its net worth. Kavan Choksi explains that you may need a professional to arrive at an accurate estimate. These assets include the value of intellectual property as well as goodwill.

Then, you can take all the business assets and determine the total value. After identifying the company's physical and intangible assets, add them together.

Finally, list the company's liabilities. Like the previous steps, you have to identify the company's physical and intangible liabilities. Physical liabilities include debt, salaries, and accounts payable. The intangible liabilities, on the other hand, are not current obligations. However, these may become a liability in the future. Add them up.

When you're done with all that, subtract assets from liabilities. Now, get the difference between the assets and liabilities. Whatever is left is the company's estimated net worth, Kavan Choksi adds.

Do you have other ways of estimating a company's net worth? Share them with Kavan Choksi in the comments section below.

For more of Kavan Choksi's insights on global finance, business, and economics, check out this page.