What do you mean by the term Equity

Question

What do you mean by the term Equity. Briefly explain it.

Answer 1

Equity: In finance, equity signifies the owner’s claim in business. This can state as well the capital of owner. It’s another name is owner’s equity. The owner in small business might be individual and can do trade with his family members. At that time, his invested money in industry will be his equity however when he has gotten secured loan from exterior, then total equity will classify into two parts one is owner’s equity and the other is creditor’s equity. Due to his business has limitless liability, therefore his own equity can be employed for payment of secured loan in situation of insolvency.