What is Equity –
Equity is an ownership of the person in any asset or company after all debts or credit associated with that asset or companies are paid off. For example if a person buy a house with no outstanding debt or credit is considered completely owners’ equity because he or she can freely sell their item for cash. Stocks or shares are called equity because they represent ownership in a company.
The following are some more definitions for the different forms of equity:
1. Any stock or security represent an ownership in a private company is called private equity.
2. As per company’s balance sheet, the amount contributed by the owners or shareholders plus the retained earnings are also referred as shareholders’ equity.
6. When a business goes solvent and has to settle the remaining amount of money after the business repays to its creditors it is called “ownership equity”