Net worth is a way of describing the overall monetary value of a person or a company. You can calculate your net worth by subtracting the money you owe from the money you have.

To put it in business terms, let’s talk about assets and liabilities. Liabilities are monetary obligations like debts, fees, or loans. Assets represent everything a company owns, including cash, investment, properties, and equipment. So if you run a cupcake cart that has $5,000 in assets (including cash, cupcake supplies, and the cart itself), but you have to pay your grandmother back the $1,000 she lent you to get started, your cupcake cart’s net worth would be $4,000.

Tags: assets, cupcakes, liabilities, net worth