With the term equity we refer to the difference between the assets and liabilities of a company’s balance sheet.
When the company is created, the shareholders’ equity coincides with the capital advanced by the economic entity that starts the business.
Over time, the two terms tend to differentiate, as the calculation of equity takes into account different aspects. So be careful not to confuse it either with the share capital or with the gross assets of a company.
But what is it for, why is it important, and how is net worth calculated? Here is the complete guide.
