Equity is the residual interest in a company's assets after deducting all liabilities. It represents the accounting claim attributable to owners, including contributed capital and accumulated results, but it is not the same as the company's market value or cash available for distribution.
Equity rises through owner contributions and retained profits and falls through losses, distributions, and some accounting adjustments. Negative equity means recognised liabilities exceed recognised assets at the reporting date.
Because accounting measurements and market expectations differ, equity in the accounts should not be treated as a sale price. It is most useful as part of a trend and alongside profitability, debt, cash flow, and the notes.
This page explains the shared concept. National legal effects may differ. Check official records before acting.
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