? Valuation/Net worth certificate is a document that is compiled and certified usually by a Chartered Accountant taking into consideration all the assets and liabilities of the individual or Enterprise. Net worth Certificate maybe required as a part of an application for the decision maker to gauge the financial health of the applicant. Net worth certificate by ca is commonly required as a part of visa application, bank loan application, franchisee application and more.
? The concept of net worth may apply to multiple levels. It can be used by individuals, groups, organizations, governments and cities and countries as a whole.
? In the case of an individual, it indicates the net worth or the economic status of the individual, that is, the value of the individual’s assets minus the liabilities. Examples of assets that individuals consider as net worth include retirement accounts, other investments, homes and cars. Debts include secured debt (eg, mortgages) and unsecured debt (eg, consumer debt or personal loans).
? The net worth of a business is also called a fund. This is the value that is usually presented in the financial statements, the book value is based on the value of all assets and liabilities.
? Why is Valuation/Net Worth Certificate Required?
Mainly, people prefer net worth certificate for visa and net worth certificate for bank loan.
- It is required for different purposes including study and tourist visas. During the visa application process, proof of net assets is required to determine the net financial value of the visa applicant.
- Assets are also evaluated for immigration purposes.
- During a bank loan application process, net worths are requested to determine the financial worth of the loan applicant.
- Networth report for visa applications helps determine the financial health of applicants.
- On the basis of networth, assurance of visa is determined.
- A franchisee application also requires a networth certificate for determining the economic capability of the applicant, to conduct business.
? Net worth certificate format
A net worth certificate by ca can be asked for different purposes based on the circumstances. While there might be already some prescribed net worth certificate format in which the certificate may be asked for, a Chartered Accountant can provide the certificate in the way he deems fit by following the necessary provisions under the law. Net worth is to be calculated as per the audited financials for the previous financial year. (The certificate must be printed on the letterhead of a practicing Chartered Accountant.)