Net Worth

Net worth is a measure of the basic monetary value of a business or an individual. It is figured by subtracting the total dollar amount of all liabilities from the total value of all assets. Also known as book value, shareholder equity or liquidation value, net worth is simple to calculate. But it can be somewhat misleading because the true market value of some assets, including houses or the loan portfolios owned by banks, can be difficult to estimate. Also, some business assets are carried on the books at their purchase price, not what they are worth today, which could be considerably more or less.