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Glossary term

Net Worth

Definition

Net worth is what you'd have left if you sold everything you own and paid off everything you owe.

Technical definition

Net worth is total assets minus total liabilities, representing the owner's equity in the operation.

Why it matters

Net worth signals financial cushion and staying power, which lenders weigh when assessing risk.

Example

If an operation owns $1.2M in assets and owes $700,000, its net worth is $500,000.

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