In business, equity is the value of a company’s assets minus the company’s liabilities. Equity can also be used to describe the ownership structure of a company. For example, if a company has $100 in assets and $50 in liabilities, the company has $50 in equity. If the same company has two owners, each with 50% equity, then each owner has $25 in equity.
Equity is an important concept for businesses because it represents the portion of the business that is owned by the shareholders. The equity of a business can be used as collateral for loans, and it can also be used to measure the performance of a company.
There are two main types of equity: common stock and preferred stock. Common stock is the most common type of equity and represents ownership in a company. Preferred stock is a type of equity that gives holders preferential treatment with regards to dividends and voting rights.