Equity is an ownership interest in the net value of a company. In accounting parlance, equity is the value of a company’s assets minus its liabilities. In a corporation, equity is typically represented by one or more classes of stock. While equity is subordinate to debt, equity is entitled to all of the residual value of a corporation, after payment of its debts, and grows as a company grows, while debt has a ceiling on the interest it receives from a company.
Last reviewed: May 14, 2021