When a business goes bankrupt and has to liquidate, equity is the amount of money remaining after the business repays its creditors. When a business goes bankrupt and has to liquidate, equity is the amount of money remaining after the business repays its creditors. This is often called "ownership equity,"
also known as risk capital

In the case of acquisition

• value of company sales - any liabilities owed by the company not transferred with the sale.
  The concept of equity has applications beyond just evaluating companies.
  We can more generally think of equity as a degree of ownership in any asset after subtracting all debts associated with that asset.

Equity is used as capital raised by a company, which is then used to purchase assets, invest in projects, and fund operations.
A firm typically can raise capital by

• issuing debt (in the form of a loan or via bonds)
• or equity (by selling stock)

Shareholder equity can be either negative or positive.

• If positive, the company has enough assets to cover its liabilities.
• If negative, the company's liabilities exceed its assets

Equity represents the value that would be returned to a company’s shareholders if

• all of the assets were liquidated
• and all of the company's debts were paid off.

The calculation of equity is a

• shareholder's equity = total assets - total liabilities

Created: 2023-10-16 Tags: #fleeting Link: Equity Definition: What it is, How It Works and How to Calculate It (investopedia.com)