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.
Liabilities include all debts that the company owes including credit card debts and loans.
The owner’s equity is the total of the assets less the liabilities. This is the value should the company sell all of its assets and pay all of its debts. This value however, does not always represent what the business is actually worth.
It is imperative to speak to your divorce lawyer about the benefits and disadvantages of obtaining a business valuation for your Property Settlement agreement.
For advice about Family Law business valuations contact us on 1800 300 170 or email us at famlaw@matthewsfolbigg.com.au
Disclaimer
Family law situations can be complex and sometimes they can involve serious issues. Information outlined is proposed to provide general guidance only. Due to the seriousness of legal matters as well as the uniqueness of your individual situation, professional advice should be sought. For advice, please contact one of our Family Lawyers.
