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What does a positive net worth mean?

Positive net worth means that assets exceed liabilities. Negative net worth indicates that liabilities exceed assets. Positive and increasing net worth indicates good financial health. Decreasing net worth is cause for concern because it might signal a decrease in assets relative to liabilities.

What is net worth & why is it important?

Net worth is a quantitative concept that measures the value of an entity and can apply to individuals, corporations, sectors, and even countries. Net worth provides a snapshot of an entity’s current financial position. Net worth is also known in business as book value or shareholders’ equity.

What does a negative net worth mean?

If the liabilities are greater than assets, it implies a negative net worth. A positive net worth is associated with good financial health, whereas negative net worth can be perceived as a negative signal and shows the inability to settle liabilities. The concept of net worth can be applied to multiple levels.

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