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Answer How are assets and liabilities connected to net worth


How are assets and liabilities connected to net worth?


Assets are the valuables you own, whereas liabilities are the debt you owe others. When your assets exceed your liabilities, you have a positive net worth. This is an ideal status that most people yearn for. A person who has a positive net worth enjoys substantial financial freedom and independence.

On the other hand, if you have more liabilities than assets, you are in a negative network. You are not financially independent, as you depend on others to finance different aspects of your day-to-day livelihood.

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