In general, equity is an ownership interest in property, an asset or a group of assets, or a business, that may be offset by debts or other liabilities.
For accounting purposes, equity is calculated by subtracting liabilities from the value of the assets owned. For an entity, equity is the difference between total assets and total liabilities (on a balance sheet):
Equity = total assets – total liabilities.
For a shareholder, an owner, or an investor, equity is the value of his/ her/ its stake in an entity. Equity might be tradable in the secondary market in the form of shares of stock, or might be a stake in a closely held company (ownership share).
In other contexts, equity may also imply the amount of own funds held in an account (e.g., a brokerage account) to establish or maintain a position in the market. In this sense, it constitutes the excess of securities over debt balance in a margin account. (see: equity in a brokerage account)
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