2.3.1.5 Sample Net Capital Calculation
XYZ Brokerage Inc. carries the accounts of many customers and has custody over their assets. The following is selected balance sheet information from XYZ Brokerage.
|
Asset |
|
|
Liability |
|
|
Cash |
$100,000 |
Accounts payable |
$25,000 |
|
|
Prepaid insurance |
$40,000 |
Customer credit balances |
$175,000 |
|
|
Customer debit balances |
$280,000 |
Stock loaned |
$45,000 |
|
|
Securities inventory—marked to the market |
$200,000 |
Bank loans |
$130,000 |
|
|
Accounts receivable |
$70,000 |
Subordinated loans |
$250,000 |
|
|
Total assets |
$700,000 |
|
Total liabilities |
$625,000 |
Step 1: Calculate net worth by subtracting total liabilities from total assets.
$700,000 – $625,000 = $75,000
Step 2: Add the amount of subordinated loans to the net worth, resulting in the total available capital.
$250,000 + $75,000 = $325,000
Step 3: Subtract all the non-allowable assets