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0 pointscgriswald6y ago0 comments

It is theoretical because it is based on the estimated, guessed, or made up value of assets. If all you have to your name is $100, your net worth is $100. If all you have to your name is a used Nintendo Switch, your net worth is theoretically $100.

0 comments

esoterica6y ago

If the going price for a used Nintendo Switch is $100 then that is your net worth, not your “theoretical“ net worth. You don’t get to redefine common phrases with specific definitions.

kmonsen6y ago

The difference is that you have to find a buyer for your switch if you want to eat, while the supermarket is required to take your cash.

This becomes even more difficult for owner large amounts of shares in the same company since you selling could have a negative effect on the shares. The reason they have the value could be that the market thinks you are in it for a long time and will provide additional value, once you start selling it could trigger a larger sell-off.

Or there could be a financial crash and the value could be cut in half.

So cash and cash-equivalent assets are special and worth more if you need to eat right now.

eschutte26y ago

Is the supermarket required to take your cash?

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cgriswaldOP6y ago

My point is that all net worth is theoretical as measured in currency D except the extreme edge case where your only asset is cash or cash equivalent in currency D.

I am not redefining net worth so much as I am pointing out its theoretical (read: unrealized) nature.

matz16y ago

While it might not be exactly equal to $100 cash. That Nintendo switch still represent real value. The value could be based on what the market price.

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