Equity refers to the value of an asset after all associated liabilities or debts have been subtracted. In a business context, it represents the ownership interest held by shareholders or business owners in the company. For example, if a company owns assets worth $500,000 and owes $200,000 in liabilities, its equity is $300,000. Equity can take different forms, such as owner’s equity in a sole proprietorship or shareholders’ equity in a corporation. It serves as a key indicator of financial health and is often used by investors, analysts, and lenders to assess a company’s net worth and stability.