FINANCE GLOSSARY
Equity
Equity
Ownership value remaining after liabilities are subtracted from asset value.
What does Equity mean?
Ownership value remaining after liabilities are subtracted from asset value. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Equity in context
A $5 million property with $3 million debt has $2 million gross equity.
Why it matters in financing
Equity can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related finance terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.