Reviewed by Aug 27, 2020| Updated on
Wealth is the value of all the assets owned by a person, company, community or a country. The creation and sustainability of wealth can be seen in the scalability of corporate business houses, ability to borrow and create economic resources by companies and the country as a whole.
Wealth - nature, scope and factors affecting it
- Wealth is the market value of all the tangible and intangible assets owned by a company or individual or any other entity, as reduced by the debts contracted. Wealth is generally measured through the net worth of an individual or an entity.
- Wealth is the sum total of the economic resources, movable or immovable, tangible or intangible created and accumulated by any person.
- Money is the most common measure of wealth. Most resources owned by a company or any person are measured in terms of moneys worth as on a particular date. Money thus acts as a unit of measurement of wealth.
- In ancient times, wealth was measured in terms of wheat, sheep, horse or cattle owned by a person. However, with progress in society and the need for uniformity, money became a common unit of measurement. Thus, net worth can be used as a measure of wealth and is comparable across currencies.
- Companies create wealth for their shareholders through business expansion, setting up of new businesses and creating economic resources. While income is a regular flow, wealth is a stock which can be measured either in absolute terms or in relative terms.
- Income is the amount of money generated over an interval of time such as annually or half-yearly or quarterly. Income represents the addition to wealth over a period of time.
- The concept of wealth is applicable to measure the value of economic goods which are either valuable or scarce. The concept is not applicable to goods that are freely available to everyone and have no basis for comparison as between individuals.