Equity

Equity represents ownership interest in a business. In the context of corporations, it refers to the value of the owners' stake, calculated as the difference between a company’s assets and liabilities.

Types of Equity:

• Common Equity: Held by ordinary shareholders with voting rights.

• Preferred Equity: Often includes priority dividends and liquidation preferences but limited/no voting rights.

Equity is critical for business financing, valuation, and investor returns. It can appreciate in value as the company grows, and it typically entitles shareholders to dividends and proceeds upon a liquidity event like an acquisition or IPO.