Equity is a financial term used to describe the value of a firm. It represents the difference between the value of all assets and liabilities. Equity can be positive, negative or zero. Positive equity means that shareholders' investment exceeds the company's total debt obligations, while negative equity means that shareholders' investment is insufficient to cover its total debt obligations.For example, if a business has total assets worth $100,000 and total liabilities worth $50,000, then its equity would be $50,000. This means that investors who own stock in the company actually own $50,000 worth of its assets.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 the assets were liquidated and all of the company's debt was paid off in the case of liquidation.
