Financial Health Indicator: A positive net worth indicates that an individual or entity has more assets than liabilities, suggesting good financial health. Conversely, a negative net worth means liabilities exceed assets, which could be a sign of financial trouble.
Wealth Measurement: Net worth is often used to measure wealth, especially for individuals, by financial planners and for comparisons in various economic contexts.
Planning and Goals: Tracking net worth over time helps in financial planning and setting goals. It provides a snapshot of where one stands financially and can help in making informed decisions about spending, saving, and investing.