Net worth: Difference between revisions
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* [[Interest]] | * [[Interest]] | ||
* [[Liabilities]] | * [[Liabilities]] | ||
* [[Net assets]] | |||
* [[Tangible net worth]] | * [[Tangible net worth]] | ||
* [[Wealth management]] | * [[Wealth management]] | ||
Revision as of 10:58, 29 November 2019
1. Loan documentation.
Broadly, Net worth is the value of equity, based on book values, which a borrower covenants to maintain at a minimum absolute or relative level (for the protection of the position of the lender).
In simple terms, the book value of equity and net worth is equal to the book values of the borrower's total assets, less total liabilities.
However, the detailed definition of Net worth for covenant compliance purposes will often be a point of negotiation between the lender and the borrower.
For example, Tangible net worth excludes intangible fixed assets from the total figure.
2.
A comparable measure for an individual, often in the context of assessing 'high net worth' in the context of wealth management services.
