Equity

Overview

Equity is the net value of a business held by its owners or shareholders, calculated as the difference between assets and liabilities.

Common use cases

• Measuring the owners' wealth.
• Calculating shareholder returns.
• Analysing financial health.
• Estimating the company's market value.

Examples of use in small businesses

• Determining what share of the business you could sell.
• Using it as security to obtain a loan.
• Analysing wealth growth over the years.