Net worth of an organization is a crucial financial indicator that represents the amount of equity that the organization holds. It is calculated by subtracting the total liabilities from the total assets of the organization. In other words, net worth is the residual interest of the owners in the assets of the organization after the liabilities have been paid off.

Explanation:

Total Assets: The total assets of an organization include all the resources that it owns. These may include cash, inventory, property, plant, and equipment, investments, and accounts receivable. The value of these assets is usually determined by their market value or their book value.

Total Liabilities: The total liabilities of an organization include all the obligations that it owes to others. These may include loans, accounts payable, taxes, and other debts. The value of these liabilities is usually determined by the amount that the organization owes to its creditors.

Excess of Total Assets over Total Liabilities: The excess of total assets over total liabilities is the net worth of the organization. This represents the value of the ownership interest that the owners of the organization have in the assets of the organization. Net worth is an important financial indicator that helps to assess the financial health of an organization.

Conclusion:

In conclusion, the net worth of an organization is calculated by subtracting the total liabilities from the total assets. The resulting figure represents the residual interest of the owners in the assets of the organization. Net worth is an important financial indicator that helps to assess the financial health of an organization and is used by investors and creditors to make investment and lending decisions.

Bcz total assets - total liabilities = net worth