One way to determine what you or your former spouse’s company is worth is to instruct your divorce lawyer to engage a single expert valuer to put a dollar figure to the value of the business. Your divorce lawyer will then instruct the valuer to analyse the company’s financial statements among other things to determine the value for the purpose of your family property proceedings.
A company’s financial statements are made up of the following:
- Balance Sheet
- Profit and Loss Statements (Or Income Statement)
- Cash Flow Statement
The Balance Sheet
The balance sheet is a snap shot of a company’s accounts. It provides at a glance what the company owns and is owed. It can give an indication of the financial position of the company at a single point in time.
The balance sheet depicts a company’s assets, liabilities and owner’s equity (net worth). Assets include cash, office equipment eg chairs and desks, all inventory and accounts receivable which refers to people who have bought from the company but have not yet paid. Non-current assets are also listed under assets which include the building and land, goodwill, patents and copyright.