net worth

Net Worth

The amount by which a company or individual's assets exceed their liabilities.

Notes:

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]).

See also: Assets, Balance Sheet, Clean Balance Sheet, Debt, Liabilities, Mortgage, Shareholder's Equity

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Net worth

Common stockholders' equity which consists of common stock, surplus, and retained earnings.

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net worth

A measure calculated by subtracting total liabilities from total assets. For an individual, total assets are recorded at current market value. For a company, net worth uses assets as recorded on the balance sheet at historical cost minus any depreciation. See also owners' equity.