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what is net worth equation. The greater the amount the higher is your net worth in the market. The assets of the company or items that it owns or holds the title to minus its liabilities equal the owners equity.
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The business also has 80000 of accounts payable and a 350000 loan which gives it total liabilities of 430000. If you have more assets than liabilities you have a positive net worth. The assets of the company or items that it owns or holds the title to minus its liabilities equal the owners equity.
Calculating net worth requires nothing more than the simplest mathematics.
Owners equity and net worth are two terms often used interchangeably. A business has 50000 of cash 200000 of accounts receivable and 400000 of inventory which gives it total assets of 650000. This equity becomes an asset as it is something that a homeowner can borrow against if need be. The net worth of a business is also known as its book value or as its owners stockholders equity.
