Equity represents the ownership value in a company after all debts and liabilities have been paid.
It reflects the residual interest that shareholders have in the company, calculated as the difference between the company’s total assets and total liabilities.
Equity can be seen as the net worth of a business from the perspective of its owners, and it includes aspects like retained earnings and contributed capital.
In the stock market, equity is also referred to as shareholders’ book value, and it serves as a key measure of financial health and ownership stake in a company.