Net Worth

Definition of 'Net Worth'

The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth. A consistent increase in net worth indicates good financial health; conversely, net worth may be depleted by annual operating losses or a substantial decrease in asset values relative to liabilities. In the business context, net worth is also known as book value or shareholders' equity.

To calculate net worth; add up all assets (real estate, investments, cash, and any other item of value) and Liabilities (Debts, Mortgages, and any other money owed). Then subtract all liabilities from current assets.

Assets - Liabilities = Net Worth

See our resource center for Net Worth and other calculators.

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