Equity

Equity in finance and accounting is the residual interest in the assets of the entity after deducting liabilities. It represents the amount that the owners of the company would receive if all assets were liquidated and all debts were paid off. In the context of investment, equity usually refers to the ownership of shares in a corporation, which may entitle the shareholder to a proportion of the profits, known as dividends, and voting rights in certain corporate decisions. Equity is a crucial element of a company’s capital structure and can provide a buffer against financial distress.