ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -How Do I Calculate My Net Worth? To calculate your net worth, you subtract your total liabilities from your total assets. Total assets will include your investments, savings, cash deposits, and any equity that you have in a home, car, or other similar assets.

Detailed explanation-2: -The debt to net worth ratio is obtained by dividing the total liabilities by the net worth. The total liabilities is the sum of all the monies owed to creditors. The net worth is the difference between the sum of all assets and the liabilities.

Detailed explanation-3: -The net worth of a bank is defined as its total assets minus its total liabilities. For the Safe and Secure Bank shown in Figure 1, net worth is equal to $1 million; that is, $11 million in assets minus $10 million in liabilities. For a financially healthy bank, the net worth will be positive.

Detailed explanation-4: -A net worth statement is a financial tool that shows your financial position at a given point in time. It is like a “financial snapshot” that shows the dollar value of what you own (assets) and what you owe (liabilities or debts). This formula for calculating net worth is Assets – Liabilities = Net Worth.