The owner’s value in a business, calculated as assets minus liabilities.
For example, a business with $350,000 in total assets and $210,000 in total liabilities has $140,000 in equity — the owner's stake after all debts are subtracted, which is reflected in the equity section of the balance sheet.
Why it matters: It represents the net worth of the business; growing equity provides a cushion against failure and builds long-term wealth for owners.
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