Calculating net worth involves finding the difference between a company’s total assets and total liabilities. This process determines the company’s financial standing and ability to meet its obligations. Assets are the resources a company owns, such as cash, inventory, and property, while liabilities are the amounts owed to outside parties, such as banks and suppliers.
The balance sheet is a financial statement that provides a snapshot of a company’s financial health at a specific point in time. It shows the company’s assets, liabilities, and equity. Calculating net worth from a balance sheet helps stakeholders assess the company’s financial position and make informed decisions. It can also assist in identifying potential opportunities and risks.