net worth

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Net worth

Net Worth

An individual or company's assets minus liabilities, in which assets exceed liabilities. For example, if a company has $3 million in assets and $1 million in debt and other liabilities, it has a net worth of $2 million. The term may apply to companies or individuals, but is often used colloquially to refer to wealthy individuals.

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.

Net worth.

A corporation's net worth is the retained earnings, or the amount left after dividends are paid, plus the money in its capital accounts, minus all its short- and long-term debt. Its net worth is reported in the corporation's 10-K filing and annual report.

Net worth may also be called shareholder equity, and it's one of the factors you consider in evaluating a company in which you're considering an investment.

To figure your own net worth, you add the value of the assets you own, including but not limited to cash, securities, personal property, real estate, and retirement accounts, and subtract your liabilities, or what you owe in loans and other obligations.

If your assets are larger than your liabilities, you have a positive net worth. But if your liabilities are more than your assets, you have a negative net worth. When you apply for a loan, potential lenders are likely to ask for a statement of your net worth.

net worth

see LONG-TERM CAPITAL EMPLOYED.

net worth

see LONG-TERM CAPITAL EMPLOYED.

net worth

The financial value of a person or company after adding all assets and subtracting all liabilities.