What Net Worth Means on a Balance Sheet
Net worth is the residual interest in a company’s assets after deducting all liabilities. On a balance sheet, it equals total assets minus total liabilities and is also called shareholders’ equity or owner’s equity.
How to Calculate Net Worth Step by Step
Locate total assets and total liabilities on the balance sheet. Subtract total liabilities from total assets to get net worth. For personal finance, list all assets and subtract all debts using the same formula.
Why This Calculation Matters
Net worth shows financial health and value creation over time. Investors and analysts use it to assess solvency, leverage, and the cushion available to creditors and owners.
For more detail on balance sheet structure and equity, see the Investopedia balance sheet guide.
