Businesses before stepping into their genesis should be aware about the factors which are going to have profound effect on their desired goals. All these factors can be easily identified if pre-sales research is made available to you by your presale research expert on time. Presales is a process or a set of activities/sales normally carried out before a customer is acquired, though sometimes presales also extends into the period the product or service is delivered to the customer.
In the following article we will elaborately discuss about the first step for presales i.e to find out the net worth of the company and how it is beneficial for framing a policy on Debt recovery management.
What is net worth of a company?
Net worth is calculated using a simple formula: it is the total assets less the total liabilities. To estimate the net worth of a company, analyze its financial statements, paying particular attention to the balance sheet.
How net worth can be an important factor in deciding on a target company?
That is one simple task which can be easily interpreted from the balance sheet of the target company. If the assets of the company is more than its liabilities then it is a sure bet. But how will you ensure whether the balance sheet details are authentic or not? To find out about its authenticity one can cross check from the Ministry of Corporate Affairs website as well as Income Tax website.
What are the sources to find out net worth of a company?
The sources to find out the the net worth of a company/companies are following-
- Visit the MCA website and find out balance sheet from public documents after paying the required fee.
- Retrieve the balance sheet of the target company from Income Tax website.
- Through personal contacts if any.
Note- You can access only one company’s details at a time at the fees applicable on MCA’s website.
It is well known to us that prevention is always better than cure, hence before your client causes a default in payment it is better to have preventive measures like presales market research. It’s like conducting a background check on your prospective customer/client/company. Hence net worth is crucial in helping you decide for your business relations. Once you find out the net worth, its current status of functionality of the target company, it will be easier for you to decide whether to extend any business relations with that company or not.
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Disclaimer – the above summary is based on the personal interpretation of the revised regulations, which may differ person to person. Hence, the readers are expected to take expert opinion before placing reliance on this article.