The value of the shares or stock issued by a company, or the value to owners after all debts and liabilities are paid. For corporations, it is commonly referred to as shareholders’ equity or market capitalization.
The equity value of the company was $525 million.
Total Equity = Total Assets – Total Liabilities
For publicly traded equity: Total Equity Value = Share Price x Total Shares Outstanding
Equity is the value paid to owners of an asset or company. If your home, for example, is bought entirely with cash, you have 100% equity ownership, and your equity value is equivalent to the market value, or purchase price, of your home. If you however use a traditional mortgage to buy your home, putting only 20% down in cash and taking out a mortgage to finance the balance of the purchase price, your equity value is only 20% of the value of your home.
In the event of a bankruptcy or liquidation, equity holders are the last stakeholders paid. Once all assets are sold, all debts and liabilities are paid first, and the balance is paid to equity owners.« Back to Glossary Index