Net Worth Definition: How to calculate net worth?

How to calculate net worth?

Very Often we hear about the Net Worth of Billionaires, Millionaires and Celebrities, and are amazed by their values. But it is important to know what exactly does Net Worth actually means ?

Net Worth is not the salary earned by the person per annum neither it is his total cumulative salary for the years, neither it is earnings or investments, nor loans or liabilities, it is actually a mixture of all the above stated things.

How to calculate net worth?

It is important to understand how do we calculate Net Worth. In this article guide, you will know what actually Net Worth is and how can we calculate it. What are the things to keep in our mind?

Net Worth Definition

Net worth is simply the difference between the asset and the liability. Net worth is a measure of entity’s worth and hence is also known has owner’s worth or shareholder equity. Net worth can be calculated for an individual, firms or companies, or even countries.

What makes net worth?

As per the definition, net worth consists of assets and liabilities. To understand net worth, one needs to first understand assets and liabilities.

Assets

Assets are the items which are owned by a person or company. Assets consist of cash and cash equivalents, inventory, plant and machinery, building etc. For calculating net worth, one must first identify the current market value of assets.

Liabilities

Liability is an item which is payable by a person or company. Liabilities are the outstanding debts and consist of bank debts, bonds, vendor payments etc.

How to calculate net worth?

The simple formula to calculate net worth is:

Net Worth = Assets minus Liabilities.

Net Worth of a Company

Investors consider a lot many things while considering investment in a company because investors want to understand at what level the company is operating at present, what are the potential opportunities for the company, how the company is valued etc. So it becomes necessary to know what the net worth of the company is.

The net worth of a company can be calculated as per the above formula.

Net worth will be equivalent to the amount left to be distributable among all the shareholders after all the liabilities are paid off from the sale of all assets valued at current market price.

Net Worth of an Individual

In case of an individual, net worth is the assets such as personal properties that consist of house, cars, jewellery, cash etc. less liabilities such as secured and unsecured loans.

Check out Net Worth of Following Top Celebrities

Net Worth of bollywood superstars

Positive and Negative Net Worth

If an individual or a company has more assets as compared to liability, there will be positive net worth. If a company has huge profits which it thinks to retain, it will lead to an increase in net worth.

If an individual or a company has more liabilities as compared to assets, there will be negative net worth. If a company has negative earnings or fewer earnings which it thinks to distribute among shareholders, it will lead to decrease in net worth.

Networth Calculator

Net worth Calculator tells you what is net worth, how to calculate Net worth, formula for net worth and exact net worth calculation,

Financial AssetsAmount
Shares & Equity Mutual Funds (Rs.)*
Fixed Income Assets (Rs.)(Fixed deposits, Bonds, debt funds, PPF etc.)*
Cash and Bank Accounts (Rs.)(Savings accounts, Cash in hand, liquid funds, etc.)*
Property (Rs.)*
Gold and Jewelleries (Rs.)*
Others (if any) (Rs.)*
Sum Total of AssetsA
LiabilitiesAmount
Home Loan (Rs.)*
Personal & other Loans (Rs.)*
Income Tax owed (Rs.)*
Outstanding bills / payments (Rs.)*
Credit Card dues (Rs.)*
Other liabilities (if any) (Rs.)*
Sum Total of LiabilitiesL

Networth =A-L

How to calculate a celebrity’s Net Worth?

First of all you should know that any net worth you find on the internet is not exactly the same worth anyone possesses, it’s an estimated worth which is calculated on the basis of many factors. It can be close to that person’s actual worth but the correct Net worth of any person is only in knowledge of that person and his Accountant if he has one.

However the estimated worth is very close to actual worth because of the sources from which the value is extracted. Many firms work closely with celebrities and businessmen for maintaining their social reputation and they provide with some valuable and approximately near to true data.

There is a lot of celebrity gossip around all celebrities in the world and this lead people to find their net worth. Basically it’s just total liabilities subtracted from the total assets but actual numbers are very different to get. So it’s an approximated estimated amount that is calculated.

If a person is a sports player the most basic important money he owns is his salary from the team which he is representing. You must also keep in account his transfer fee for each transfer, his National and professional contracts.

And imagine if he is a filmstar then keep in mind the amount he makes from his movies, movie fees, If he has a partnership with the production house or even if he owns a production house. You must also keep in account his older and newer films to come and his success that resembles his upcoming movies fees.

Apart from these every person have some assets from the parental property, his own real estates, virtual and physical investments, cars , houses, share market or cryptocurrencies etc. Also a celebrity if he is on social media he earns from the various social media handles, so also calculate the money he will be getting from there along with involving the sponsorships and promotion revenue he is getting.

Then there comes a question about what chunk of money a person has in his bank account and the answer is very simple and yet not so that he will have money in his banks as near the same amount he will earn. There is a market value concept in every market be it Acting, Sports , music etc.

And the money a person has in his bank account is nearhow similar to the market value he owns. Various sites and magazine firms work on calculating the celebrity’s market value. Market value keeps on fluctuating with time, performances and the success a person gets in his field, but the bank account also has the same relation somehow.

If a person will be on his high then his salary and earning amount will cancel out his liabilities and remaining will add up to the assets but if he is in a low in his career then his liabilities will be arranged on the loss of his bank balance.

Market value is calculated keeping in mind a person’s place in the market. If we take on  sports a player’s market value is based on his recent transfer, salary, popularity, promise, and his performances while if we move on to Filming world then any actor , director or producer’s market value is calculated on the basis of the performances of his recent films having a major part and his old films having a minor part. His or her films reviews and the applauds by audience is also a factor in the marker value.

Important points to remember while estimating any one’s Net Worth -:

Promotions And Sponsorships:

It is a very important factor to keep in account that if a person is famous and is active on social media , Different brands that resembles the ideology of the celebrity will contact them for the promotion of their products and offer them sponserships.

Promoting a brand for a small amount of time provide him with only a little amount while of he get into a deal for a bigger time or fer sponsership from them like being brand ambassador or something then it can make him a lot amount of money.

Social Media Accounts Earnings:

A celebrity is mostly available on all social media platforms if not some of them. And they make quite a amount from the social media and their followers.

Try to keep all amounts in same currency:

So not confuse it with currency changes in different countries. Just try to manage all the accounts in the same currency, e.g. if you opt for dollars then keep all amounts in dollars and if you are going to keep it in Rupees or any other currency then keep it in that.

Use authentic and trusted Resources:

Only use information and facts available on trusted sites and firms and if can mention them in your article.

What is Personal Net Worth?

Personal net worth is a very similar term that is related to the upper part. Above: Any other person was calculating a celebrity or any other person’s worth but here the person itself will calculate his net worth. He just has to subtract his total liabilities from his total assets after making a tally list of both of them.

# Personal Net Worth is more accurate and true then the estimated net worth by any third person, but it is not widely available and then the major sources combinely forms the estimated net worth that is available to all.

Net Worth Importance and its uses :

Net worth can help a person in many ways. Some important facts you will know about and then can make very efficient decision regarding your economic conditions can be fulfilled by a Net worth are –

  • To evaluate and understand the current financial position,
  • To set your financial goals, to make investment plans.
  • Now, what makes up a positive and negative net worth? Ideally, you have a positive net worth if you have more assets than liabilities. But, if your liabilities exceed your assets, you are on the downside.

These above-mentioned points are very important points that can be underwhelming but can help you in making many important decisions in your life.

So, we hope you have understood what Net Worth is. One should always ensure that your Net Worth never goes negative!

Net worth Faq

What is net worth of a person?

Net worth is the value of all assets, minus the total of all liabilities. In other words, net worth is what is owned minus what is owed. This net worth calculator helps determine your net worth

How do you calculate net worth?

Your net worth is the currency amount of your assets minus all your debts. You can calculate your net worth by subtracting your liabilities (debts) from your assets. If your assets exceed your liabilities, you will have a positive net worth.

What is an example of net worth?

net worth is calculated by subtracting your liabilities from your assets. For example, if the value of your house, car, and bank balance etc adds up to $300,000 and you have $200,000 in outstanding debts, your net worth is $100,000

How much is Justin Bieber worth?

At the young age of 27, pop singer Justin Bieber is one of the world’s wealthiest performers, with a net worth of $285 million. As per various reports on the internet, his annual salary to be in the around $80 million, with most of his money coming from music and related merchandise sales

Are you rich if you have 2 million dollars?

In order to be called “wealthy” in U.S. in 2021, you need to have a net worth of nearly $2 million — $1.9 million to be exact. This is less than the net worth of $2.6 million Americans cited as the threshold to be considered wealthy in 2020, according to Schwab’s 2021 Modern Wealth Survey

How much is rihanna worth?

Rihanna’s net worth is estimated at $1.7 billion. That figure comes from Forbes, which declared in an August 4, 2021 headline, “Fenty’s Fortune: Rihanna Is Now Officially a Billionaire