Equity

In accounting and finance, equity is the difference between the value of the assets/interest and the cost of the liabilities of something owned. For example, if someone owns a car worth $15,000 but owes $5,000 on that car, the car represents $10,000 equity. Equity can be negative if liability exceeds assets.

In an accounting context, shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the equity of a company as divided among individual shareholders of common or preferred stock. Negative shareholders' equity is often referred to as a (positive) shareholders' deficit.

For the purposes of liquidation during bankruptcy, ownership equity is the portion of a business's equity which remains for the owners after all liabilities have been paid and all other creditors have been reimbursed.