Definition of Net Worth | Assets Owned Minus Debts Owed

Accounting Definitions

Browse terms alphabetically

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Net Worth Definition

Short Definition:
Net worth of a business is calculated by deducting all debt owed by the business from all assets owned by the business. It is usually based on the life of the business instead of a specific period of time such as a month.

Expanded Definition:
The best way to determine the value of a business is to figure out the net worth.  This calculation compares the amount of accumulated assets (cash, accounts receivable, inventory, equipment) of a business to the total liabilities (accounts payable, loans due, payroll taxes). The result is referred to as net worth and is reported on a financial report called a Balance Sheet.

Related Blog Article:
What Is Business Net Worth?

Get Started
Try it free

Sign up today for a free, no-obligation 30-day trial.

Try It Free for 30 Days
Get Started
Take a demo

Kick the tires with a free self-guided demo.

Take a Self-Guided Demo