Equity

Equity (Definition)

Equity is the value of an ownership interest in property, including shareholders equity in a business.

Key aspects of equity include:

1. Represents the residual interest in the assets of an entity after deducting liabilities
2. Calculated as total assets minus total liabilities
3. In a company context, also known as shareholders equity or owners equity
4. Can increase through profit retention or additional capital contributions
5. Decreases when a company experiences losses or pays out dividends
6. Important indicator of a companys financial health and value
7. Used in various financial ratios to assess a companys performance and financial position

Understanding equity is crucial for assessing a companys financial strength, investment potential, and overall value.