Quick Definition

Equity represents ownership value in an asset or a company, typically expressed as the difference between the asset's value and the liabilities associated with it.

Formula

Examples

• 1A homeowner has a house valued at $300,000 with a mortgage of $200,000. The homeowner's equity in the house is $100,000.
• 2An investor owns 100 shares in a company, and each share is worth $50. The total equity the investor has in the company is $5,000.
• 3In a business, if the total assets are valued at $1 million and the total liabilities are $600,000, the equity of the business is $400,000.

Tags