What is equity?

The term equity refers to the residual value or participation of shareholders or partners in a company after subtracting all their liabilities and debts.

In other words, the equity represents the portion of ownership that shareholders or partners have over the company’s assets once all debts and liabilities have been covered.

The equity can also be understood as the net worth of a company, that is, the difference between its assets (such as properties, investments, cash, etc.) and its liabilities (such as loans, debts, financial obligations, etc.).

For example, if a company has a share capital of 100 million euros and issues 10 million shares, each share has a value of 10 euros. That is the equity of the company or of each shareholder.

Related concepts

• Social capital
• Residual price
• Shares
• Stakes