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- For the film entitled Net Worth, see Net Worth (film).
In business, net worth (sometimes called net assets) is the total assets minus total outside liabilities of an individual or a company. For a company, this is called shareholders' equity and may be referred to as book value. Net worth is stated as at a particular point in time. In the case of an individual, the term estate is used. That term is used especially in the context of bankruptcy law and in relation to probate, on the death of the individual.
In personal finance, net worth is used to refer to an individual's net financial position; similarly, it uses the value of all assets minus the value of all liabilities (debt).
Net worth in business is generally based on the value of all assets and liabilities at the carrying value which is the value as expressed on the financial statements. To the extent items on the balance sheet do not express their true (market) value, the net worth will also be inaccurate.
Net worth in this formulation is not an expression of the market value of the firm: the firm may be worth more (or less) if sold as a going concern.
On reading the balance sheet, if the accumulated losses is more than the shareholder's equity, it is a clear case of negative net worth.
See also
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