eli5 What is equity?
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from Investopedia.com
[link](https://www.investopedia.com/terms/e/equity.asp)
Equity represents the value that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debts were paid off.
We can also think of equity as a degree of residual ownership in a firm or asset after subtracting all debts associated with that asset.
Equity represents the shareholders’ stake in the company, identified on a company’s balance sheet.
The calculation of equity is a company’s total assets minus its total liabilities, and it’s used in several key financial ratios such as ROE.
Home equity is the value of a homeowner’s property (net of debt) and is another way the term equity is used.
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