Equity describes how much stock a shareholder holds 💱. It also refers to the money a shareholder would get if a company were to liquidate. In short, total shareholder equity equals the value of the company.
Equity is calculated by deducting total company liabilities from total company assets. Here is a simple formula to calculate equity: Equity = Total Assets - Total Liabilities.
Equity investments are quite popular as you have a better chance of sharing the company’s profits. To check ROE (Return on Equity), divide net income by shareholder equity.
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