What Is Net Worth in Business?
Net worth in business is the difference between total assets and total liabilities. It shows the residual value that would remain if a company settled all its debts and sold all its assets.
How Net Worth Is Calculated
Net worth equals total assets minus total liabilities. Assets include cash, accounts receivable, inventory, and property, while liabilities cover loans, accounts payable, and other obligations. For a clearer breakdown, see Investopedia's explanation of net worth.
Why Net Worth Matters for Businesses
Net worth is a key measure of financial health and equity. Lenders and investors often review it to assess stability, creditworthiness, and the ability to absorb losses. A positive net worth generally indicates that a business has more value than debt.
