What Is Net Worth?
Net worth is the value of everything you own minus everything you owe. It is calculated by subtracting total liabilities from total assets. A positive result means you have more assets than debts, while a negative result means the opposite. Net worth is a common measure of overall financial position.
What Is Net Debt?
Net debt focuses only on liabilities and shows how much debt remains after subtracting cash and other liquid assets. It is calculated by taking total debt and subtracting cash and cash equivalents. A lower net debt suggests less reliance on borrowing, while a higher net debt can signal greater financial risk.
Key Differences and Why They Matter
The main difference is scope. Net worth includes all assets and liabilities, while net debt looks only at debt and cash. Net worth gives a broad view of wealth, whereas net debt highlights short-term borrowing pressure. Both metrics help individuals and businesses assess financial health and compare their position over time.
For more details on calculating personal net worth, see Investopedia: Net Worth.
