A company has issued 1 million shares of Rs. 10 each. They are trading in the market at Rs. 12. Reserves of the company are Rs. 4 million. The company also has not written off miscellaneous expenditure of Rs. 3 million. What is the company’s net worth? 

Net worth is calculated as the sum of paid-up share capital and reserves, minus any miscellaneous expenditure not written off (fictitious assets).  Calculation:  Paid-up Capital: 1 million shares  @ Rs. 10 = Rs. 10 million  Reserves: Rs. 4 million  Less: Miscellaneous Expenditure: -Rs. 3 million Net worth= Capital+ Reserves-Misc. Expenditure Net Worth= 10 million+4 million -3 million                   = 11 million   Note: The market price (Rs. 12) is not used for calculating the book value or net worth of the company; it is used for market capitalization.