Business Dictionary
Equity
Definition
The value of the shares issued by a company.
Deep Dive
Equity represents the ownership interest in a company, typically measured by the value of shares issued to shareholders. When an individual or entity holds equity, they own a portion of the company and have a proportional claim on its assets and earnings after all liabilities have been settled. It is a fundamental component of a company's financial structure and a key metric for investors.
Examples & Use Cases
- 1A startup founder owning 80% of their company's equity, giving them majority control and the largest share of future profits.
- 2An angel investor receiving a 10% equity stake in a tech company in exchange for an early-stage investment.
- 3Publicly traded shares on a stock exchange represent fractional equity ownership in a corporation, allowing millions of individuals to invest.
Related Terms
SharesStakeOwnershipValuation