FINANCE GLOSSARY
Net Worth
Net Worth
Total assets minus total liabilities.
What does Net Worth mean?
Total assets minus total liabilities. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Net Worth in context
Assets of $5 million less liabilities of $3 million produce $2 million net worth.
Why it matters in financing
Net Worth can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related finance terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.