Equity Term

Equity has two meanings but we mostly talk about the first: an ownership interest in a company represented in a stock (a share), or a membership interest (in the case of an LLC), or some other security.

The second meaning of equity is in relationship to a company’s balance sheet. It is the sum of the cash contributed to (invested in) the company by the owners, plus the retained earnings (or minus the cumulative losses).

Don Gooding

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