netoväärtusega

Netoväärtus, known in English as net worth, is a fundamental concept in personal finance and accounting. It represents the total value of an individual's or entity's assets minus their liabilities. In simpler terms, it is what you own minus what you owe.

Assets include anything of value that is owned, such as cash, savings accounts, investments like stocks and bonds, real estate (homes, land), vehicles, and personal property. Liabilities, on the other hand, are debts or obligations that are owed to others. These can include mortgages, car loans, student loans, credit card balances, and any other outstanding debts.

Calculating net worth involves summing up all assets and then subtracting the total sum of all liabilities. The resulting figure can be positive, indicating that assets exceed liabilities, or negative, meaning liabilities outweigh assets. A positive net worth is generally a sign of financial health, while a negative net worth suggests financial difficulty.

For individuals, tracking net worth over time is a key indicator of financial progress. An increasing net worth suggests that wealth is being accumulated, while a decreasing net worth may signal overspending or financial setbacks. Financial planning often involves strategies aimed at increasing net worth through saving, investing, and debt reduction. For businesses, net worth is also referred to as equity and is a crucial component of their balance sheet, reflecting the owners' stake in the company.