Practice Activity 4.2 Calculation of the net worth of a business

Hape Enterprises have been in the textile industry for ten years. The owner of Hape Enterprises is Mr. Joe. He started the business as a bachelor with ₦10,000. As at 31 August 2018, the total assets of the Company amount to ₦5,700,000. The total liabilities are ₦1,421,210.

Required: Advise Mr. Joe on the net worth of his business as at 31 August 2018.

A suggested solution to practice activity 4.2

The net worth of Hape Enterprises as at 31 August 2018 is:

Assets minus Liabilities

Assets = ₦5,700,000

Liabilities = ₦1,421,210

Therefore, the net worth of Hape Enterprises as at 31 August 2018 is:

₦5,700,000 - ₦1,421,210

= ₦4,278,790