Final answer:
The formula for calculating net worth is simple: net worth = total assets - total liabilities. Net worth is an important measure of a bank's financial health and determines whether a bank can meet its financial obligations.
Step-by-step explanation:
The formula for calculating net worth is simple.
Net worth is equal to total assets minus total liabilities. For example, if a bank has $11 million in assets and $10 million in liabilities, the net worth would be $1 million.
Net worth is an important measure of a bank's financial health.
A positive net worth indicates that the bank has more assets than liabilities, while a negative net worth means the bank owes more than it owns.
It is crucial for a bank to have a positive net worth so that it can meet its financial obligations, including repaying depositors if they try to withdraw their money.