Equity

Definition

Equity, in financial terms, refers to the ownership interest or residual value that remains in a company after deducting its liabilities from its assets.

What is equity?

It represents the portion of a company’s assets that belongs to its owners or shareholders. Essentially, equity is the value that shareholders hold in a company, and it can be thought of as the difference between a company’s total assets and its total liabilities. Equity provides a measure of the company’s net worth and is a key component of the company’s balance sheet. It can also be referred to as “shareholders’ equity” or “stockholders’ equity.”

Example of equity

Let’s consider a fictional company, XYZ Inc., with the following financial information:

  • Total assets: $1,000,000
  • Total liabilities: $400,000

In this case, the equity of XYZ Inc. is $600,000. This amount represents the ownership interest that shareholders have in the company after accounting for all its liabilities.

Ready to grow your business?

Clever finance tips and the latest news

Delivered to your inbox monthly

Join the 95,000+ businesses just like yours getting the Swoop newsletter.

Free. No spam. Opt out whenever you like.

Our offices:

Disclaimer: Swoop Finance Ltd (Swoop) helps US firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans or other finance products ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness. Swoop may receive a commission or finder’s fee for effecting such introductions. If you feel you have a complaint, please read our complaints section highlighted above and also contained within our terms and conditions.
How Swoop makes money: In order to provide services free of charge, Swoop generates revenue through commission from companies featured on our platform. The commission we receive does not impact the cost of the product, service, or policy, and your payments remain unaffected by our commission structure.

© Swoop 2025

Looks like you're in . Go to our site to find relevant products for your country. Go to Swoop