What Is Net Worth?
Net Worth Definition
Net worth in either context can be positive or negative.
If net assets exceed net liabilities, then it is positive; if net debts or liabilities exceed assets then the net worth is negative.
Define Net Worth in Simple Terms
Net worth is a useful way to take a financial snapshot of an entity at a single point in time.
A high net worth for a business indicates to lenders that a company’s assets are high relative to debt, making them a more attractive candidate for receiving a loan.
Calculating Net Worth
Individuals with a significant net worth are known as high net worth individuals, and are the prime market for wealth managers since they have significant assets to invest.
An important note is that corporate net worth, as calculated from figures from a balance sheet, is based on historical costs or book values, whereas individual net worth takes into account the current market value of their assets and their current debt costs.
For More Information
If you’re not sure how much you’re worth, we can help. Reach out to a financial advisor in Austin, TX for any questions about calculating your personal net worth or getting started on improving it so that you have financial freedom and success at every turn. You can also check out our financial advisor page if you live outside the locale.
What Is Net Worth FAQs
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.