Given $125,000 in total liabilities and $100,000 in total assets, what is the net worth?(1 point)
−$25,000
−$15,000
$225,000
$25,000
The net worth is calculated by subtracting the total liabilities from the total assets:
$100,000 (total assets) - $125,000 (total liabilities) = -$25,000
Therefore, the net worth is -$25,000. Answer choice: −$25,000
explain
Net worth is a measure of an individual or company's financial health. It is calculated by subtracting total liabilities from total assets.
In this given scenario, the total liabilities are $125,000, which means that there are outstanding debts or obligations amounting to $125,000. On the other hand, the total assets are $100,000, which represents the value of all owned resources or investments.
To calculate the net worth, we subtract the total liabilities from the total assets: $100,000 - $125,000 = -$25,000.
A negative net worth indicates that the individual or company has more liabilities than assets, meaning they owe more money than they own in assets. In this case, the net worth is -$25,000, which is answer choice −$25,000.