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Meaning / Definition of

Capital Net Worth

Categories: Accounting,

total assets minus total liabilities of an individual or company. For a public company, the excess of assets over liabilities consist of retained earnings, common stock and additional paid-in surplus; here also called owner's equity or shareholders' equity or net assets. For an individual, the excess of assets over liabilities is most likely to come from savings and any additional contributions to income that they have received. Some economists say net worth is not very useful, since financial statements value most assets and liabilities at historical cost, which is usually not a good indicator of true value. also called capital net worth.

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Definition / Meaning of

Netting

Categories: Banking,

Netting is a process the national securities clearing corporation (NSCC) uses to streamline securities transactions.To net, the NSCC compares all the buy and sell orders for each individual security and matches purchases by clients of one brokerage firm with corresponding sales by other clients of the firm. Those orders can be finalized internally by adjusting the firm's books to reflect changes in ownership.The small percentage of trades that aren't netted require firms with net short positions, whose clients sold more than they purchased, to deliver the required securities to the NSCC, or more precisely have them debited from their Depository Trust Corporation (DTC) custodial account for delivery to the NSCC. The NSCC credits those shares to the firms with a net long position, whose clients purchased more shares than they sold.In the final step, the DTC nets the total costs of buying and selling throughout the trading day to limit the amount of money that must be exchanged among firms. Firms with a net debit wire payment to the DTC, and firms with a net credit receive funds.

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