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In finance equity is ownership of assets that may have debts or other liabilities attached to them.
Definition equity en finance. Companies raise money because they might have a short term need to pay bills or they might have a long term goal and. Equity is measured for accounting purposes by subtracting liabilities from the value of an asset. Want to learn more. Equity typically referred to as shareholders equity or owners equity for privately held companies represents the amount of money that would be returned to a company s shareholders if all of.
Equity finance is an efficient way for smes to finance high risk investments because it allows investors to share more fully in the rewards of a successful venture. The people who buy shares are referred to as shareholders of the company because they have received ownership interest in the company. For example if someone owns a car worth 9 000 and owes 3 000 on the loan used to buy the car then the difference of 6 000 is equity.
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