What is "Net Worth" meaning?

Net worth is a key financial metric that calculates the difference between what an individual or business owns (assets) and what they owe (liabilities). For individuals, this includes cash, investments, and property minus mortgages, loans, or credit card debt. For businesses, it reflects shareholders’ equity and serves as an indicator of long-term sustainability and financial strength.

Example

“After scaling her digital agency and clearing startup debt, her net worth hit seven figures within five years.”

How is "Net Worth" used in business?

In business, net worth helps determine a company’s value and financial resilience. Investors and lenders often analyze net worth before funding decisions. In personal finance, it's commonly used to track progress toward wealth-building goals or financial independence.

Pro Tip

Regularly reviewing net worth helps highlight financial progress and identify areas where debt reduction or asset growth is needed.

Related Terms

Assets, Liabilities, Equity, Personal Finance