Equity

1.

Law.

A legal system that resolves disputes between persons by resort to principles of fairness and justness.

2.

The capital of a firm invested by those accepting the greatest degree of risk, for example the holders of ordinary shares (also known as common stock or common equity) in a company.

3.

Securities representing the rights of the risk capital investors in 2. above.

4.

Financial reporting.

Amounts in the financial report of a company representing the book value of the interests of the shareholders in 2. above.

It includes share capital, cumulative retained profits, and other reserves.

It is also known as 'total equity' or 'shareholders' funds'.

5.

The net value of an asset, after deducting any debt relating to it or secured on it.

See also

• An introduction to equity capital
• Blue chip
• Book value
• Capital employed
• Capital structure
• Common law
• Common stock
• Compound instrument
• Debt
• Debt for equity swap
• Dividend growth model
• Entity
• Equity cost of capital
• Equity instrument
• Equity investments
• Equity swap
• Kay Review
• Liabilities and equity
• Market/book ratio
• MCT
• Mezzanine
• Ordinary shares
• Private equity
• Reserves
• Return on equity
• Share
• Share capital
• Shareholders’ funds
• Stock
• Total Loss Absorbing Capacity
• Total return swap