In financial or business terms, net generally refers to the amount remaining after every possible deduction has been made. For example, a business’s net profit is the amount left after taxes and all other expenses have been deducted from the overall amount.
Net Worth
Another word associated with net is “worth.” The net worth is quite similar to the net profit in that the former is also “what is left.” For corporations, the net worth is the amount that is left after expenses have been paid off. These expenses include shareholder’s dividends, taxes, and debt.
A corporation’s net worth is also sometimes called shareholder equity. For people considering a company for investment purposes, this value is one of the most important factors to look at.
For an individual, net worth means the same thing – the liabilities are subtracted from the assets of that individual.
In order to calculate the net worth of an individual, one must add up all his assets. These include cash, property, securities, retirement accounts, and the like. The liabilities are then to be added up as well. These include credit card debt, loans, and all other obligations. The net worth of the individual is the result of the assets minus the liabilities.
