How to Calculate a Bank’s Net Worth: A Step-by-Step Guide

How to Calculate a Bank's Net Worth: A Step-by-Step Guide

The net worth of a bank, also known as its book value, is a crucial financial metric that measures the difference between the bank’s total assets and its total liabilities. For instance, if a bank has total assets worth $100 million and total liabilities of $75 million, its net worth would be $25 million.

Calculating a bank’s net worth is essential for various stakeholders, including investors, creditors, and regulators. It provides insights into the financial health and stability of the institution. Historically, the concept of net worth has evolved over time, becoming increasingly important as banking regulations grew more stringent.

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