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What is Net Worth?

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What is Net Worth
What is Net Worth

We will discuss the What is Net Worth?

What is Net Worth?

In simple language, Net worth is the assets minus liabilities, a person or corporation owns. It highlights the financial position or health of the person or corporation. Similarly, it is a quantitative measure to identify the richer person, corporation, or company.

Key Highlights

  • Net worth in Business means book value per share or intrinsic value.
  • In the case of a person, it indicates a man or woman with high-value assets.
  • Currently, Elon must is the person with the highest net worth in the world.

Example

Suppose, Ram has the following assets

  • House of Rs. 1 crore
  • Investment in the stock market of Rs. 50 lakhs.
  • automobiles and golds of Rs. 40 lakhs

Labilities of Ram:

  • Account Payable of Rs. 15 lakhs.
  • House loans of Rs. 35 lakhs.

So, Ram’s net worth can be calculated as

= ( 1 crore + 50 lakhs + 40 lakhs ) – (15 Lakhs + 35 Lakhs)

= 1 crore 40 lakhs.

How to Calculate Net Worth?

Net worth means subtracting all the liabilities from the total assets. Assets mean all the assets which have a monetary value. On the other hand, liabilities means all the payable such as loans, mortgage, account payable, etc.

Hence, it can be positive or negative.

Negative Net Worth

Negative Net Worth means having more liabilities than assets. In simple words, total liabilities are more than total assets.

In early life, having a negative net worth is ok. For example in students’ life due to student loans. But in life, it hampers the financial status of your daily life.

Hence, we should take loans that can be repaid on time.

Net Worth in Business

Net Worth in Business means book value per share or shareholders equity. It is calculated by subtracting all the liabilities from the total assets.

Other Important Links:

Net Worth of Elon Musk: CLICK HERE

Net Worth of Binod Chaudhary: CLICK HERE

Job Vacancy in Nepal: CLICK HERE

Ney worth of Gautam Adani: CLICK HERE