Equity refers to the value of an asset after all associated liabilities or debts have been subtracted.
In a business context, it represents the ownership interest held by shareholders or business owners in the company. For example, if a company owns assets worth 500,000 and owes 200,000 in liabilities, its equity is 300,000.
Equity can take different forms, such as owner’s equity in a sole proprietorship or shareholders’ equity in a corporation. It serves as a key indicator of financial health and is often used by investors, analysts, and lenders to assess a company’s net worth and stability.