Net Worth is an important indicator for both Individuals and companies to check their financial stability and know their worth.
In this article, we discuss the different types of net worth in detail.
Types of Net Worth
- Individual Net Worth
- Company Net Worth
- Net Worth of Governments
- Net Worth of Countries
1. Individual Net Worth – Net Worth in Personal Finance
Individual net worth refers to a person’s current economic position. It is calculated by assessing the assets minus liabilities.
Calculating your personal net worth is a great way to measure where you stand financially. You can use this information to plan for retirement, buy a house, or plan for investments.
2. Company Net Worth – Net Worth in Business
Company Net Worth is also called Equity or Book Value.
For business owners, company net worth is important data to measure where they stand currently and measure their value.
Understanding how much money a company makes and what it owns is important when looking to invest in stocks.
For investors knowing how much a company is worth will give you a better idea of whether or not you should buy its stock. Although most investors neglect this data and choose other indicators like growth rate, holding an good net worth for long periods may impress big investors which helps the company to get big money as investments.
3. Net Worth of Governments
A government’s net worth is the difference between its assets and its liabilities. While government debt is one way to measure a government’s financial health, the government’s assets and liabilities can also be examined to determine the actual worth of governments.
Many countries use an accrual-based accounting system, which records financial obligations when they are incurred, as opposed to when they are paid—in order to provide an accurate picture of their spending.
4. Countries Net Worth
Countries net worth is defined as the total value of a country’s assets minus its liabilities. The United States has the highest net worth at $21.8 trillion, followed by China ($10.6 trillion), Japan ($5.3 trillion) and Germany ($2.1 trillion).
Net worth is calculated by subtracting a nation’s debts from its assets. For example, if a country owes $100 billion and owns $200 billion worth of assets, then its net worth would be $100 billion.
A country’s net worth is determined by the size of its economy, population and government spending. In addition, the level of economic growth also affects a country’s net wealth.
1. United States – $111 Trillion
The US has the highest GDP (Gross Domestic Product) in the world at $111.04T.
2. China – $120 trillion
China’s economy is growing rapidly, having surpassed Japan’s in 2012. In 2016, it was estimated that China had the third-largest economy in the world after the USA and Japan. Currently the net worth is $120 Trillion. This makes its economy the largest in the world.
3. India – $6 trillion
It’s fast becoming one of the most popular places among startups. Thanks to its English speaking population, low operating costs, and rising education levels, many businesses are setting up base there.