From Accounting 101, you will remember that assets must equal liabilities plus owner's equity
. If your business is growing, you will probably find that your assets increased more than liabilities and owner's equity
A cumulative paid-in capital account would represent the cumulative sum of owner's equity
as of the date of adoption of the portfolio accounting system, plus all capital contributions or withdrawals after that date.
The owner's equity
reached till 30/9/2014 about $380.82 million compared to about $360.37 million as of 31/12/2013 with a growth of 5.7 per cent.
Applying underwriting criteria of (i) 1.20x debt service coverage ratio, and (ii) a loan sizing constant of 6.4% (5% interest rate, 30-year amortization), this increased NOI would generate additional loan proceeds of more than $10 million, reducing the owner's equity
The "bottom line" of all those decisions adds up to "owner's equity
," the true measure of the company's value.
Term loans up to 100 per cent of the purchase price of a new building are usually available, provided the value of the premises and the owner's equity
in the assets of the business exceed the purchase price.
"With that, we reduce the need for owner's equity
and reduce the risk to a lending institution," says Osborne.
To apply Hurwicz's principle, an analyst fills in a worksheet, as shown in exhibit 2, page 61, in which the rows and columns show the decision choices and the possible outcomes in a business whose owner's equity
is $5 million and the technology investment costs $2 million.
increased during Q1 to reach about $374.9 million compared to $360.3 million at the end of 2013 with a growth of 4.1 per cent, where the return on average equity (ROAE) reached about 16.01 per cent.
The loan was used to refinance the existing debt and reeapitalize the owner's equity
Once you have calculated your assets and liabilities, subtracting the latter from the former reveals the owner's equity
, net worth or net assets.