What is a net worth statement?


Quick Answer

A net worth statement outlines the assets and liabilities of an individual or a business, the Business Dictionary explains. It reports both the long- and short-term amounts, and the net worth is determined by subtracting the amount of liabilities from the assets.

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Full Answer

Assets are anything of value that can be liquidated to cash, Investopedia says. This includes real estate and personal property, along with cash. Liabilities are debts such as credit card bills, utilities, student loans and mortgages.

One challenge in determining net worth is placing accurate values to the assets, notes Investopedia. Individuals should make more conservative estimates when placing value to avoid over-inflating their net worth.

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