What is equity?

Equity Definition: Equity, also known as shareholders’ equity, is the value or money that is eligible to be distributed to shareholders. Equity is calculated by deducting the liabilities and debt from assets, to determine how much a company has in the event of a liquidation.

It’s important for a company to provide the amount of equity in the form or reports and statements, especially in the event of an acquisition or other major changes to a business structure. If equity isn’t paid in money, it can be offered in kind, in the form of assets or a portion of the company’s shares.

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