Net income is total revenues minus total expenses. If the revenues are larger, the result is net income. If the expenses are larger, the result is net loss.
Net loss occurs when total expenses are larger than total revenues. If the revenues are larger, the result is net income.
The net worth of an individual is total assets minus total liabilities. For a company, net worth is called equity or stockholders’ equity.
Assume Maria has a savings account of $25,000 and investments of $75,000. Her car has a fair value of $20,000. Her debts total $50,000. Maria’s net worth is $70,000. See the example below.