How are assets and liabilities connected to net worth?

Question: How are assets and liabilities connected to net worth?

Assets and liabilities are essential to determining net worth. Assets, such as cash, property, and investments, add value to an individual or business, while liabilities, like loans and mortgages, represent debts owed. Net worth is calculated by subtracting total liabilities from total assets, providing a clear picture of financial health. Essentially, net worth shows what remains after all debts are paid off, highlighting the balance between what one owns and owes.

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