Posted in Finance, Accounting and Economics Terms, Total Reads: 397
Wealth can be defined as the total Market Value of all the physical and intangible assets of an entity subtracting all its debts. In other words, wealth is the accumulation of resources. As per the economists, wealth can be defined as “anything of value”. It can also be defined as a monetary measure which is the sum of natural, human and physical assets. In short, we can say:
Wealth = Market Value of assets owned – Value of liabilities owed
Wealth is expressed in a variety of ways. For Individuals, Net Worth is the common expression of wealth; while for countries, wealth is measured by Gross Domestic Product (GDP) or GDP per capita. For any country excess wealth and wealthy persons drive economic growth. The main objective of every individual and the government of any country is to maximize wealth. The economic condition of every country is directly related with the net worth of the common man of that particular country.
If the net worth of the majority of the people in any country is more, then automatically the GDP of that country will be more compared to the country where the per capita income of the people is less. Similarly, it can be said that the company whose net worth is positive is in a good position compared to the one whose net worth is negative.