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BRILLIANT’S Long Term Financing and Valuation of Goodwill & Shares 189

The following points are important for es- ZoQ> AgoQ²>g H$m AZw‘mZ bJmZo Ho$ {bE {ZåZ{b{IV
timating the net assets: {~ÝXþ ‘hÎdnyU© h¢…
1. The fixed assets of the company should be 1. H§$nZr Ho$ {’$³ñS> AgoQ²>g H$m CZHo$ ZoQ> [a¶bmBOo~b
revalued at their net realizable value. d¡ë¶y na nwZ‘y©ë¶m§H$Z H$aZm Mm{hE&
2. Inventory should be taken at current mar- 2. B§d|Q>ar H$mo dV©‘mZ ~mOma ‘yë¶ na {b¶m OmZm Mm{hE&
ket prices.
3. Investment should also be taken at cur- 3. B§doñQ>‘|Q> ^r dV©‘mZ ~mOma ‘yë¶ na {H$¶m OmZm
rent market prices. These can be taken at Mm{hE& BÝh| bmJV na {b¶m Om gH$Vm h¡ ¶{X ~mOma
cost if the fall in the market value is be-
lieved to be temporary. ‘yë¶ ‘| {JamdQ> AñWm¶r ‘mZr J¶r h¡&
4. Other current assets like Bills Payable or 4. Aݶ H$a§Q> AgoQ²>g O¡go {~ëg no¶oE~b ¶m g§S´>r
sundry Debtors should be valued at their S>oãQ>g© H$mo CZHo$ Ano{jV ZoQ> [a¶bmBOo~b d¡ë¶y na
expected net realizable value. ‘yë¶m§H$Z {H$¶m OmZm Mm{hE&

5. All useless assets appearing in the Balance 5. ~¡b|g erQ> ‘| {XIZo dmbo g^r AZwn¶moJr AgoQ²>g H$m
Sheet are to be eliminated. AZw‘mZ bJmZm hmoVm h¡&
6. Goodwill may be valued on the basis of 6. JwS>{db H$m gwna àm°{’$Q> Ho$ AmYma na ‘yë¶m§H$Z
super profit (we will discuss later, in this {H$¶m OmZm Mm{hE& (h‘ ~mX ‘| Bg M¡ßQ>a ‘| MMm©
chapter).
H$a|Jo)&
7. All unrecorded assets and liabilities are to 7. g^r AZ[aH$m°S>}S> AgoQ²>g VWm bm¶{~{bQ>rO H$m
be taken into consideration. {dMma H$aZm hmoVm h¡&
From the aggregate value of assets, all AgoQ²>g H$s EJ«rJoQ> d¡ë¶y go g^r E³gQ>Z©b
external liabilities are to be deducted to arrive bm¶{~{bQ>rO ZoQ> AgoQ²>g Am§H$‹S>o na nhþ§MmZo Ho$ {bE
at the net assets figure. KQ>mZm hmoVm h¡&
The external liabilities include sundry E³gQ>Z©b bm¶{~{bQ>rO ‘| g§S´>r H«o${S>Q>g©, {~ëg
creditors, Bills Payable, Loans, Debentures, etc. no¶o~b, bmoZ, {S>~|Mg© Am{X g{å‘{bV h¢&
The net assets of a company, would be then EH$ H§$nZr H$s ZoQ> AgoQ²>g H$mo BgHo$ níMmV²
apportioned in the following manner:
{ZåZ{b{IV ê$n ‘| AbJ {H$¶m Om¶oJm…
1. If the preference shareholders have prior- 1. ¶{X {à’$a|g eo¶ahmoëS>g© H$s dmB§qS>J-An na {S>{dS>|S>
ity to dividend as well as to capital on a Ho$ gmW-gmW H¡${nQ>b H$s ^r dar¶Vm hmoVr h¡ Vmo
winding-up, they will be valued at par, if CZH$s EQ> nma d¡ë¶y hmoJr ¶{X do {S>{dS>|S> H$s g‘mZ
they expect the same rate of dividend as Xa H$mo eo¶g© ‘| {ZYm©[aV ê$n ‘| Anojm H$aVo h¢ {H$ÝVw
specified in the shares. But, if the required
rate of return is more than the specified ¶{X Amdí¶H$ aoQ> Am°’$ [aQ>Z© {ZYm©[aV Xa go A{YH$
rate, they are to be valued above par to h¡ Vmoo CÝh| H¡${nQ>b VWm {S>{dS>|S> XmoZm| H$mo nyam H$aZo
cover both capital and dividend. Ho$ {bE nma go D$na ‘yë¶ bJmZm hmoVm h¡&
2. After deducting the value of preference 2. ZoQ> AgoQ²>g go {à’$a|g eo¶g© H$m ‘yë¶ KQ>mZo Ho$
shares, as calculated above, from the net níMmV² O¡gr D$na JUZm H$s J¶r h¡, ~¡b|g H$mo
assets, the balance will be divided by the
number of equity shares. The resultant fig- B{³dQ>r eo¶g© H$s g§»¶m go ^mJ {X¶m Om¶oJm& CËnÝZ
ure will be the value of each equity share. Am§H$‹S>m à˶oH$ B{³dQ>r eo¶a H$m ‘yë¶ hmoJm&