What Is Net Worth
Net worth is the difference between a company's total assets and total liabilities. It shows the residual value that would remain if the company settled all its debts. A positive figure indicates more assets than obligations, while a negative figure signals the opposite.
Key Components
Assets include cash, accounts receivable, inventory, property, and investments. Liabilities cover loans, accounts payable, and other obligations. The balance sheet provides the primary figures needed for this calculation.
Calculation Steps
Start by locating total assets and total liabilities from the company's latest balance sheet. Subtract liabilities from assets to arrive at net worth. For a more detailed view, analysts often review equity sections and intangible assets. Additional guidance is available at Investopedia.
