Equity

Equity is a term used in several disciplines with related but distinct meanings. In finance and business, it commonly refers to an ownership stake in an asset or company. In law and ethics, equity denotes principles of fairness and just treatment.

In corporate finance, equity holders have a residual claim on a company's assets after liabilities are paid. On a balance sheet, owners' equity equals assets minus liabilities and includes contributed capital, retained earnings, and other comprehensive income; treasury stock reduces equity. Equity securities, such as common or preferred stock, represent ownership interests and are traded on markets.

In real estate, home equity is the portion of property value owned outright by the homeowner, calculated as property value minus outstanding mortgage debt. Equity financing means raising capital by selling ownership interests rather than debt.

In accounting, the formula is assets minus liabilities equals owners' equity. This figure changes with profits, losses, new share issues, or distributions to owners. The market value of equity, or market capitalization, is the stock price times shares outstanding and often differs from the book value of equity.

In law, equity refers to a body of doctrines developing fairness where rigid legal rules would produce unjust results. Equitable remedies, such as injunctions or specific performance, supplement damages. The term also appears in discussions of social equity, focusing on fair access to resources and opportunities.