Finance & Moneybeginner
Net Worth
Definition
The total value of everything you own minus everything you owe, applied at both a personal level and a business level. Business net worth is also called equity or book value.
Why it matters
Understanding net worth provides a comprehensive financial health snapshot beyond income and cash flow. A founder can appear profitable while having negative net worth due to debt obligations exceeding asset values.
Example
A founder adds up her business assets: £30,000 in equipment, £15,000 in stock, and £8,000 in her business bank account. She subtracts her outstanding loan of £20,000. Her business net worth is £33,000.
Related terms
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