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Net worth
 
 
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In business, net worth (sometimes called net assets) is the total asset
Asset

In business and accounting, assets are everything of value that is owned by a person or company. It is a claim on the property your income of a borrower....
s minus total outside liabilities
Liability

In the most general sense, a liability is anything that is a wikt:hindrance, or puts individuals at a disadvantage. It can also be used as a slang term to describe someone that puts a team or group of which they are a member at a disadvantage, and would thus be better off without....
 of an individual or a company. For a company, this is called shareholders' equity and may be referred to as book value
Book value

In accountancy, book value or carrying value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset....
. Net worth is stated as at a particular point in time. In the case of an individual, the term estate
Estate

Estate may refer to:* Real estate - a law term that encompasses land along with anything permanently affixed to the land, such as buildings, specifically property that is fixed in location....
 is used. That term is used especially in the context of bankruptcy
Bankruptcy

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed or initiate a restructuring....
 law and in relation to probate
Probate

Probate is the legal process of administering the estate of a deceased person by resolving all claims and distributing the deceased person's property under the valid will....
, on the death of the individual.

In personal finance
Personal finance

Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, personal budget, save, and spend monetary resources over time, taking into account various financial risks and future life events....
, net worth (or wealth
Wealth (economics)

In economics and business, wealth of a person or nation is the value of assets owned net of Liability#Financial accounting owed at a point in time....
) refers to an individual's net financial position; similarly, it uses the value of all assets minus the value of all liabilities (debt).

Net worth in business is generally based on the value of all assets and liabilities at the carrying value
Book value

In accountancy, book value or carrying value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset....
 which is the value as expressed on the financial statements
Financial statements

Financial statements are formal records of a business' financial activities.In British English, including United Kingdom company law, financial statements are often referred to as accounts, although the term financial statements is also used, particularly by accountants....
.






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In business, net worth (sometimes called net assets) is the total asset
Asset

In business and accounting, assets are everything of value that is owned by a person or company. It is a claim on the property your income of a borrower....
s minus total outside liabilities
Liability

In the most general sense, a liability is anything that is a wikt:hindrance, or puts individuals at a disadvantage. It can also be used as a slang term to describe someone that puts a team or group of which they are a member at a disadvantage, and would thus be better off without....
 of an individual or a company. For a company, this is called shareholders' equity and may be referred to as book value
Book value

In accountancy, book value or carrying value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset....
. Net worth is stated as at a particular point in time. In the case of an individual, the term estate
Estate

Estate may refer to:* Real estate - a law term that encompasses land along with anything permanently affixed to the land, such as buildings, specifically property that is fixed in location....
 is used. That term is used especially in the context of bankruptcy
Bankruptcy

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed or initiate a restructuring....
 law and in relation to probate
Probate

Probate is the legal process of administering the estate of a deceased person by resolving all claims and distributing the deceased person's property under the valid will....
, on the death of the individual.

In personal finance
Personal finance

Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, personal budget, save, and spend monetary resources over time, taking into account various financial risks and future life events....
, net worth (or wealth
Wealth (economics)

In economics and business, wealth of a person or nation is the value of assets owned net of Liability#Financial accounting owed at a point in time....
) refers to an individual's net financial position; similarly, it uses the value of all assets minus the value of all liabilities (debt).

Net worth in business is generally based on the value of all assets and liabilities at the carrying value
Book value

In accountancy, book value or carrying value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset....
 which is the value as expressed on the financial statements
Financial statements

Financial statements are formal records of a business' financial activities.In British English, including United Kingdom company law, financial statements are often referred to as accounts, although the term financial statements is also used, particularly by accountants....
. To the extent items on the balance sheet do not express their true (market) value, the net worth will also be inaccurate.

Net worth in this formulation is not an expression of the market value
Market value

Market value is the price at which an asset would trade in a competitive Walrasian auction setting. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some circumstances....
 of the firm: the firm may be worth more (or less) if sold as a going concern.

On reading the balance sheet, if the accumulated losses is more than the shareholder's equity, it is a clear case of negative net worth.

See also

  • High net worth individual
    High net worth individual

    A high net worth individual is a person with a high net worth. In the private banking business, these individuals typically are defined as having investable assets in excess of US$1 million....
  • Billionaire
    Billionaire

    A billionaire is a person who has a net worth of at least one 1000000000 units of currency, such as United States dollars , U.K. pound sterlings or euro ....
  • Millionaire
    Millionaire

    A millionaire is an individual whose net worth or wealth exceeds one million units of currency. It can also be a person who owns one million units of currency in a bank account or savings account....
  • Wealth (economics)
    Wealth (economics)

    In economics and business, wealth of a person or nation is the value of assets owned net of Liability#Financial accounting owed at a point in time....