Financial Dictionary
Net Worth
The amount by which a company or individual's assets exceed their liabilities.
Investopedia Commentary
For a company, this is known as shareholder's (or owner's) equity and is determined by subtracting liabilities on the balance sheet from assets. For example, if a company has $45 million worth of liabilities and $65m worth of assets the company's net worth (shareholder's equity) would be $20m ($65m - $45m).
Alternatively, let's say an individual has only three assets, $100,000 worth of common stock, $30,000 worth of bonds and $40,000 worth of equity in their house. Conversely they have only one liability, $150,000 owing on their mortgage. The individual's net worth would be $20,000 ([$100,000 + $30,000 + $40,000] - [$150,000]).
Related Links
Reading The Balance Sheet
Advanced Financial Statement Analysis
See also: Assets, Balance Sheet, Clean Balance Sheet, Debt, Liabilities, Mortgage, Shareholder's Equity
Also spelled: networth, total net worth, tnw
