Net Wealth Measure
A Net Wealth Measure is a wealth measure that substracts total economic liability from total asset value.
- AKA: Net Worth.
- Context:
- output: a Net Wealth Value.
- It can range from being an Economic Agent Net Wealth Measure to being an Economic Population Net Wealth Measure.
- It can range from being a Nominal Net Wealth Measure to being a Real Net Wealth Measure.
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- Example(s):
- Counter-Example(s):
- See: Net Profit, Net Income, Assets, Liability (Financial Accounting), Company (Law), Book Value, Personal Finance, Wealth (Economics), Market Value, Financial Statement.
References
2014
- (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/net_worth Retrieved:2014-4-30.
- In business, net worth (sometimes called net) is the total assets minus total outside liabilities of an individual or a company. Put another way, net worth is what is owned minus what is owed. For a company, this is called shareholders' preference and may be referred to as book value. Net worth is stated as at a particular year in time. In the case of an individual, the term estate is used in relation to deceased individuals in probate. For businesses, the term is used in the context of fraudulent law and on the dissolution of the company.
In personal finance, net worth (or wealth) refers to an individual's net economic position; similarly, it uses the value of all assets (long term assets) minus the value of all liabilities.
Net worth in business is generally based on the value of all assets and liabilities at the carrying value which is the value as expressed on the financial statements. To the extent items on the balance sheet do not express their true (market) value, the net worth will also be inaccurate.
Net worth in this formulation is not an expression of the market value of the firm: the firm may be worth more (or less) if sold as a going concern.
On reading the balance sheet, if the accumulated losses exceed the shareholder's equity, it is a negative value for net worth.
- In business, net worth (sometimes called net) is the total assets minus total outside liabilities of an individual or a company. Put another way, net worth is what is owned minus what is owed. For a company, this is called shareholders' preference and may be referred to as book value. Net worth is stated as at a particular year in time. In the case of an individual, the term estate is used in relation to deceased individuals in probate. For businesses, the term is used in the context of fraudulent law and on the dissolution of the company.