Equity
Also called: equity capital, equity financing
Ownership in a business, or money raised by selling ownership, as opposed to money borrowed.
"Equity" has two related meanings. In financing, it is money a company raises by selling part-ownership (shares), which never has to be repaid but gives the new owners a share of all future profits. On a balance sheet, it is the value left for the owners after subtracting liabilities from assets.
People also use "equities" to mean shares in general, as in "investing in equities".
Example
A company raising ₹100 crore by issuing new shares is raising equity. If it borrowed the ₹100 crore from a bank instead, it would be raising debt.
Learn more in these lessons
- Why companies issue sharesWhy do companies sell shares to the public?
- Assets, liabilities and equityWhat are assets, liabilities and equity?
Related terms
Spotted a mistake or something unclear? Report it by email. Here is how corrections work.