An analysis of unprofitability influence on enterprise net wealth value

Аuthors

Pimenov A. N.^1*, Panagushin V. P.^2**, Semenov P. N.^2***

1. North-West Administrative District in Moscow, 13/2, Svobody str., Moscow, 125362, Russia
2. Moscow Aviation Institute (National Research University), 4, Volokolamskoe shosse, Moscow, А-80, GSP-3, 125993, Russia

*e-mail: pimenovoleg@jmail.com
**e-mail: panagushin@mai.ru
***e-mail: k502@mai.ru

Abstract

One of the key indicators of financial stability and appeal for an enterprise is its net wealth. The net wealth demonstrates the real owned capital of the enterprise. A drop of the net wealth relate as a rule to losses caused with financial and economic activity of the enterprise. Joint-stock companies with net wealth less than their authorized capital stock are at the present time attractive objects for company takeover. Joint-stock companies with understated net wealth have as a rule low market equity value. This circumstance produces favorable conditions to buying up stock of the company for the purpose of management encroachment as applies to the company. A technique is presented to analyze an actual value of net wealth basing on accounting calculations.

Keywords:

owned capital; net wealth; financial stability; unprofitability