How much are you? Yes, it is an interesting question which may have thousands of answers based on different aspects of such as religion, society, relationships etc. To answer this question financially, you may have to know about the concept called net worth, which gives your current total financial value. So, lets have a look at net worth as this is a key factor when measuring the success of a person or a company.
By definition net worth is the difference between the values of total assets and liabilities. To calculate the net worth, first calculate the total value of your assets such as stocks, stock funds, bonds, bond funds, cash in hand, savings, fixed deposits, retirement accounts, annuities, value of properties (movable and immovable), arts, collectible and jewelry. Then calculate the total liabilities such as mortgages, all sorts of loans, credit cards etc. Now reduce the second value from the first one and see what you get. If it is a negative value, you are doing badly in terms of finance. That means you owe more than what you have. This may be the best time for you to come up with the plan to make your net worth a positive value.
Anyway, majority of us would have a negative value for our net worth, especially if we don’t own an asset of a significant value or if we have taken mortgages against the assets we have. Not having a positive net worth also may be a psychological barrier for some individuals.
When it comes to the companies, net worth is calculated the same way but their assets can be little different. Sometimes, their assets and liabilities are called different names to be complied with some of the articulation standards in the business world. Their assets have “carrying value” which is defined as value expressed on the financial statements. Due to this reason, their assets may not have the accurate market value assigned in the financial statements so their net worth may not be accurate. Net worth should not be misunderstood as the market value of the organization and the latter is derived based on different factors.