net worth
NET WURTH
/nɛt wɜːrθ/
The value of all assets, minus the total of all liabilities.
A snapshot of an individual's or company's financial health at a specific point in time. It includes tangible assets (property, cash) and intangible ones (investments), offset by debts.
The story behind the word. This is a compound term. 'Net' comes from Old French 'net,' meaning 'clean' or 'pure,' referring to the amount remaining after all deductions. 'Worth' comes from Old English 'weorþ,' meaning 'value' or 'price.' So, 'net worth' literally means the 'clean value' or 'true value' after all debts are accounted for.
Word relationships
- equity: Often used in specific contexts like home equity (value minus mortgage) or shareholder equity in a company.
- wealth: A broader term for an abundance of valuable possessions or money; 'net worth' is a specific financial calculation of wealth.
Commonly confused with
- assets: 'Assets' are things you own; 'net worth' is assets minus liabilities (what you owe).
Collocations
- calculate net worth
- positive net worth
- negative net worth
- increase net worth
- personal net worth
Example sentences
- "Calculating your net worth regularly helps you track your financial progress over time." Personal finance assessment.
- "Despite owning several properties, his significant mortgage debt meant his net worth was not as high as some assumed." Wealth assessment.
- "The company's net worth plummeted after a series of bad investments and increased liabilities." Business valuation.
Memory hook
It's your 'worth' after everything 'net' (cleaned up) is considered. Clean value
When not to use
Do not use 'net worth' to refer to income or just assets; it specifically requires the subtraction of liabilities.
Fun facts
- A person can have a negative net worth if their liabilities (debts) exceed their assets.
Related words
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