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Equity Definition

November 9, 2015

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Term Definition
Equity in a business represents the money or assets contributed to a business by the owner(s) of the business. It can also refer to the value of a business.

Extended Definition
Money invested in a business is called equity. Equity is determined by subtracting liabilities from assets. Equity can also refer to the value placed on a business, as it reflects the money and assets left over after liabilities have been paid. When equity is positive, the business is generally profitable. When businesses are losing money, equity is generally a negative number.

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