Effective Net Worth

The shareholders' equity of a corporation, plus subordinated debt. Effective net worth is particularly useful in closely held corporations, since executive officers in these entities are also its owners. Subordinated debt can include debentures or loans to the firm by an owner. Such owners' loans are considered an extension of the company's net worth, provided a subordination agreement is already in place.

For example, a closely held corporation with total assets of $10 million and total liabilities of $6 million would have a net worth of $4 million. Assume total liabilities include subordinated loans such as debentures and loans from owners of $1 million. Effective net worth in this case would be $5 million.


Investment dictionary. . 2012.

Look at other dictionaries:

  • effective net worth — net worth plus subordinated debt. Bloomberg Financial Dictionary …   Financial and business terms

  • Net capital rule — The uniform net capital rule is a rule created by the U.S. Securities and Exchange Commission ( SEC ) in 1975 to regulate directly the ability of broker dealers to meet their financial obligations to customers and other creditors.[1] Broker… …   Wikipedia

  • Net (economics) — In economics, net means after deductions. A related concept is gross, meaning before deductions. Nett is an alternative spelling used in British English. Usage In this sense, it may appear, separated by a comma, following the noun it modifies,… …   Wikipedia

  • Net metering — Part of a series on Green economics Concepts …   Wikipedia

  • Net metering in the United States — Main article: Net metering Net metering is an electricity policy for consumers who own (generally small) renewable energy facilities (such as wind, solar power or home fuel cells) or V2G electric vehicles. Net , in this context, is used in the… …   Wikipedia

  • Fort Worth Transportation Authority — Infobox Bus transit name = Fort Worth Transportation Authority logo size = 140 image size = 250px image caption = #557 idling at the Fort Worth Intermodal Transportation Center (ITC). company slogan = parent = founded = headquarters = 1600 East… …   Wikipedia

  • Fort Worth Alliance Airport — Infobox Airport name = Fort Worth Alliance Airport image width = 150 caption = FAA airport diagram IATA = AFW ICAO = KAFW FAA = AFW type = Public owner = City of Fort Worth operator = city served = Fort Worth, Texas location = elevation f = 722… …   Wikipedia

  • субординированный, подчиненный, второстепенный, имеющий более низкий статус — Второстепенный в отношении претензий к активам по сравнению с другими задолженностями, т.е. выплачиваемый после того, как выплачены другие задолженности, имеющие более высокий приоритет. Некоторые второстепенные (второй очереди) задолженности… …   Финансово-инвестиционный толковый словарь

  • Economic Affairs — ▪ 2006 Introduction In 2005 rising U.S. deficits, tight monetary policies, and higher oil prices triggered by hurricane damage in the Gulf of Mexico were moderating influences on the world economy and on U.S. stock markets, but some other… …   Universalium

  • ECONOMIC AFFAIRS — THE PRE MANDATE (LATE OTTOMAN) PERIOD Geography and Borders In September 1923 a new political entity was formally recognized by the international community. Palestine, or Ereẓ Israel as Jews have continued to refer to it for 2,000 years,… …   Encyclopedia of Judaism

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.