Net worth is a measure of an individual or organization’s financial health. It is the difference between assets and liabilities and it represents the value of all assets owned minus all debts and other liabilities. In other words, it is the value of what an individual or organization owns, minus what they owe.
For an individual, net worth is calculated by adding up the value of all assets, such as cash, investments, and property, and then subtracting all liabilities, such as mortgages, credit card debt, and student loans. The resulting figure is the individual’s net worth.
For a company, net worth is also known as shareholder equity, it’s calculated by subtracting the company’s liabilities from its assets. The resulting figure is the value of the company that belongs to the shareholders.
Net worth can be positive or negative. A positive net worth means that an individual or organization has more assets than liabilities and is in a strong financial position. A negative net worth means that an individual or organization has more liabilities than assets and is in a weaker financial position.
It’s important for individuals and businesses to track their net worth over time, to monitor their financial health and make informed decisions about their financial future.