Equity: Difference between revisions
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Amounts in the balance sheet of a company representing the book value of the interests of the shareholders. | Amounts in the balance sheet of a company representing the book value of the interests of the shareholders. | ||
It includes share capital, cumulative retained profits, and other reserves. | It includes share capital, cumulative retained profits (or losses), and other reserves. | ||
It is also known as 'total equity' or 'shareholders' funds'. | It is also known as 'total equity' or 'shareholders' funds'. | ||
The book value of total equity is equal to the book value of the company's net assets. | The book value of total equity is equal to the book value of the company's net assets (or net liabilities). | ||
These two items in a balance sheet always balance - so long as there are no errors. | These two items in a balance sheet always balance - so long as there are no errors. | ||
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A legal system that resolves disputes between persons by resort to principles of fairness and justness. | A legal system that resolves disputes between persons by resort to principles of fairness and justness. | ||
8. ''Ethics - governance''. | |||
Fair treatment between different individuals and different groups. | |||
:<span style="color:#4B0082">'''''Equity & inclusion are priority for investors'''''</span> | |||
:“Diversity, equity and inclusion is emerging as a priority topic for investors, with some of the world’s largest asset managers reporting increased engagement with portfolio companies in this area." | |||
:''FitchRatings - November 2021.'' | |||
== See also == | == See also == | ||
* [[An introduction to equity capital]] | * [[An introduction to equity capital]] | ||
* [[Asset manager]] | |||
* [[Assets]] | * [[Assets]] | ||
* [[Balance]] | |||
* [[Balance sheet]] | * [[Balance sheet]] | ||
* [[Blue chip]] | * [[Blue chip]] | ||
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* [[Common stock]] | * [[Common stock]] | ||
* [[Compound instrument]] | * [[Compound instrument]] | ||
* [[Cost of equity]] | |||
* [[Debt]] | * [[Debt]] | ||
* [[Debt for equity swap]] | * [[Debt for equity swap]] | ||
* [[Debt to equity ratio]] | |||
* [[Diversity]] | |||
* [[Dividend]] | |||
* [[Dividend growth model]] | * [[Dividend growth model]] | ||
* [[Entity]] | * [[Entity]] | ||
* [[Equality]] | |||
*[[Equitable]] | |||
* [[Equity accounting]] | |||
* [[Equity beta]] | |||
* [[Equity capital]] | |||
* [[Equity cost of capital]] | * [[Equity cost of capital]] | ||
* [[Equity instrument]] | * [[Equity instrument]] | ||
* [[Equity investments]] | * [[Equity investments]] | ||
* [[Equity market]] | |||
* [[Equity method]] | |||
* [[Equity risk]] | * [[Equity risk]] | ||
* [[Equity risk premium]] (ERP) | |||
* [[Equity structured deposit]] | * [[Equity structured deposit]] | ||
* [[Equity swap]] | * [[Equity swap]] | ||
* [[Financial markets]] | |||
* [[Fitch]] | |||
* [[Green equity]] | * [[Green equity]] | ||
* [[Hybrid capital]] | * [[Hybrid capital]] | ||
* [[Inclusion]] | |||
* [[Kay Review]] | * [[Kay Review]] | ||
* [[Liabilities]] | * [[Liabilities]] | ||
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* [[Net assets]] | * [[Net assets]] | ||
* [[Net worth]] | * [[Net worth]] | ||
* [[NOSH]] | |||
* [[Ordinary shares]] | * [[Ordinary shares]] | ||
* [[Own funds]] | * [[Own funds]] | ||
* [[Private equity]] | * [[Private equity]] | ||
* [[Quasi-equity]] | |||
* [[Reporting entity]] | * [[Reporting entity]] | ||
* [[Reserves]] | * [[Reserves]] | ||
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* [[Stakeholder]] | * [[Stakeholder]] | ||
* [[Statement of changes in equity]] | * [[Statement of changes in equity]] | ||
* [[Statement of shareholders' equity]] | |||
* [[Stock]] | * [[Stock]] | ||
* [[Total Loss Absorbing Capacity]] | * [[Total Loss Absorbing Capacity]] | ||
Latest revision as of 11:23, 14 June 2023
1. Financial reporting - balance sheet.
Amounts in the balance sheet of a company representing the book value of the interests of the shareholders.
It includes share capital, cumulative retained profits (or losses), and other reserves.
It is also known as 'total equity' or 'shareholders' funds'.
The book value of total equity is equal to the book value of the company's net assets (or net liabilities).
These two items in a balance sheet always balance - so long as there are no errors.
This is what is meant by a balance sheet "balancing".
2. Financial reporting.
Comparable amounts for financial reporting entities that are not companies.
3. Capital investment.
The capital of a firm invested by those accepting the greatest degree of risk, for example the holders of ordinary shares (also known as common stock or common equity) in a company.
4. Securities.
Securities representing the rights of the risk capital investors in 3. above.
For example, ordinary shares, also known as common stock.
5. Banking and bank regulation.
Abbreviation for common equity.
6. Net asset value.
The net value of an asset, after deducting any debt relating to it or secured on it.
For example, the value of a residential property, after deducting the amount of a mortgage borrowing secured on it.
If the value of the borrowing exceeds the value of the asset, the situation can be described as 'negative equity'.
- Example: Equity and Negative equity
- A house is worth EUR 400k.
- A borrowing of EUR 300k is secured by a mortgage over the house.
- The net worth is the difference between the value of the the house (asset) EUR 400k and the borrowing (liability) EUR 300k
- 400k - 300k = EUR 100k
- The Equity in the house is the difference between the current value, and any loans secured over it.
- This is also EUR 100k.
- If the value of the house falls to EUR 250k, the borrowing now exceeds the value of the asset.
- This is 'negative equity' (of EUR 50k = 250k - 300k).
7. Law.
A legal system that resolves disputes between persons by resort to principles of fairness and justness.
8. Ethics - governance.
Fair treatment between different individuals and different groups.
- Equity & inclusion are priority for investors
- “Diversity, equity and inclusion is emerging as a priority topic for investors, with some of the world’s largest asset managers reporting increased engagement with portfolio companies in this area."
- FitchRatings - November 2021.
See also
- An introduction to equity capital
- Asset manager
- Assets
- Balance
- Balance sheet
- Blue chip
- Book value
- Capital
- Capital employed
- Capital structure
- Common equity
- Common law
- Common stock
- Compound instrument
- Cost of equity
- Debt
- Debt for equity swap
- Debt to equity ratio
- Diversity
- Dividend
- Dividend growth model
- Entity
- Equality
- Equitable
- Equity accounting
- Equity beta
- Equity capital
- Equity cost of capital
- Equity instrument
- Equity investments
- Equity market
- Equity method
- Equity risk
- Equity risk premium (ERP)
- Equity structured deposit
- Equity swap
- Financial markets
- Fitch
- Green equity
- Hybrid capital
- Inclusion
- Kay Review
- Liabilities
- Liabilities and equity
- Market/book ratio
- Member
- Mezzanine
- Mortgage
- Negative equity
- Net assets
- Net worth
- NOSH
- Ordinary shares
- Own funds
- Private equity
- Quasi-equity
- Reporting entity
- Reserves
- Return on equity
- Risk
- Share
- Share capital
- Shareholder
- Shareholder value
- Shareholders’ funds
- Shareholders’ wealth
- Stakeholder
- Statement of changes in equity
- Statement of shareholders' equity
- Stock
- Total Loss Absorbing Capacity
- Total return swap
