net worth

Definitions (2)

1. For a company, total assets minus total liabilities. Net worth is an important determinant of the value of a company, considering it is composed primarily of all the money that has been invested since its inception, as well as the retained earnings for the duration of its operation. Net worth can be used to determine creditworthiness because it gives a snapshot of the company's investment historyAlso called owner's equity, shareholders' equity, or net assets.

2. For an individual, the value of a person's assets, including cash, minus all liabilities. The amount by which the individual's assets exceed their liabilities is considered the net worth of that person. Automated online tools, such as Personal Capital, can make net worth calculation and tracking an easy task.

Use net worth in a sentence

We are considering a couple of different companies to invest in but ABC Inc. has a much higher net worth than the others so we will likely choose them.

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John had a net worth of one million dollars and was able to obtain a loan twice that amount for a new house. As long as his other debts remain low he will be able to make the payments.

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With the surge in popularity of carbonated water, the net worth of the beverage company had skyrocketed from three million to five million dollars in a matter of months.

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