Definition:
The net worth of a business is the value of that business at a specific point in time. Net worth is calculated by subtracting the business's liabilities from its assets.
Net worth is a misleading concept, since the value of a business is constantly changing. Assets depreciate in value, liabilities are paid off or taken on, profits are made, and owners take money out of a business, decreasing the cash in the business. That is why net worth is determined as of a specific date - the end of a month, quarter, or year.
Net worth is expressed on the balance sheet of a business. For a corporation, it is "retained earning," while for other business forms it is usually "owner's equity" or "partnership equity."
