When measuring business performance, which term refers to the total sum of assets minus liabilities?

The term that refers to the total sum of assets minus liabilities is net worth. This concept is essential in assessing a business's financial health because it represents the value that would remain if all debts were paid off, essentially reflecting the ownership stake in a business.

Net worth is calculated using a straightforward formula: Total Assets - Total Liabilities. When a business has positive net worth, it indicates that the assets exceed the liabilities, which is a sign of financial strength. Conversely, negative net worth suggests that liabilities surpass assets, indicating potential financial trouble.

While equity is a similar concept often used in the context of a corporation (where it represents the ownership interest of shareholders), net worth is the broader term that encompasses both personal finance and business contexts. Therefore, although equity is related, net worth captures the complete picture of financial standing.

Assets and liabilities are critical components in the calculation of net worth, but they do not represent the net outcome themselves. Market value pertains to the value of a company as determined by stock market trading, which can fluctuate based on investor perceptions and other factors, rather than being a direct calculation of financial health like net worth.