A figure representing the total value of an individual’s assets minus their liabilities offers a snapshot of their financial standing. This calculation considers various holdings, including real estate, investments, and other valuable possessions. Debts, such as loans and mortgages, are subtracted to arrive at the final sum. Understanding this calculation provides insight into an individual’s overall financial health.
For instance, a business owner’s holdings might include the value of their company, personal properties, and stock portfolio. From this total, outstanding business loans and a personal mortgage would be subtracted. Another example could be a retiree whose assets primarily consist of retirement savings and a home. Their liabilities might include a car loan and credit card debt. The difference between these figures represents their overall worth.