Net Worth Definition

Net worth shows your company’s asset value after liabilities are paid.

Net Worth Expanded Definition:
The best way to determine the value of a business is to figure out its net worth. To calculate net worth, deduct all debt your business owes from the assets you own.

This calculation compares the amount of accumulated assets (cash, accounts receivable, inventory, equipment) to the total liabilities (accounts payable, loans due, payroll taxes).

Your net worth is usually based on the life of the business instead of a specific period of time such as a month. The result is referred to as net worth and is reported on a financial report called a balance sheet.

Related Article
What Is Business Net Worth?
What Is a Balance Sheet?

Last Updated By

Christan Neff | Apr 17, 2023

Check out Our Accounting Software

See a Demo

Back to Top