A calculation of all assets owned by an individual, minus their liabilities, represents their overall financial standing. This encompasses tangible assets like real estate and vehicles, as well as financial holdings such as stocks, bonds, and other investments. Debts, including mortgages, loans, and credit card balances, are subtracted from the total asset value to arrive at this figure. Understanding this calculation provides valuable insight into an individual’s financial position.
For example, if someone owns a house worth $300,000 and has $100,000 in savings, but also carries a $150,000 mortgage, their financial standing would be $250,000. Another example involves an individual with $50,000 in investments and a $10,000 car loan; their financial position would be $40,000. These examples illustrate how assets and liabilities interact to determine overall financial health.