Net worth is what remains after subtracting what is owed
Net worth is the value of assets minus outstanding liabilities at a particular point in time. Someone with ₹8 lakh in assets and ₹3 lakh in debt has a net worth of ₹5 lakh. A high income alone does not reveal this figure because income is a flow, while net worth is a snapshot.
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A snapshot of ownership
Assets are things with economic value that a person or business owns. Liabilities are amounts owed. Subtracting liabilities from assets gives net worth.
Suppose a person has ₹2 lakh in cash and an asset worth ₹6 lakh, alongside an outstanding loan of ₹3 lakh. Net worth is ₹8 lakh minus ₹3 lakh, or ₹5 lakh.
The calculation depends on the values used. An old purchase price may differ from what an asset could sell for today, and selling costs can reduce the amount realised.
Net worth also does not describe cash availability. Most of that ₹5 lakh could be tied up in an asset that takes time to sell. A positive balance sheet and enough cash for this week's expenses are separate questions.