Share
VIDEOS 1 TO 50
Equity vs. debt | Stocks and bonds | Finance & Capital Markets | Khan Academy
Equity vs. debt | Stocks and bonds | Finance & Capital Markets | Khan Academy
Published: 2009/02/01
Channel: Khan Academy
Equity Financing (Lesson 1 of 2)
Equity Financing (Lesson 1 of 2)
Published: 2014/10/25
Channel: Matt Evans
What is Equity (Financial Accounting Tutorial #10)
What is Equity (Financial Accounting Tutorial #10)
Published: 2013/12/13
Channel: Notepirate
Bloomberg Global News LIVE
Bloomberg Global News LIVE
Published: 2016/08/31
Channel: Bloomberg
Entrepreneurship - Debt and Equity Financing
Entrepreneurship - Debt and Equity Financing
Published: 2012/07/23
Channel: Council for Economic Education
Equity finance
Equity finance
Published: 2015/03/17
Channel: Business Wales/Busnes Cymru
Debt vs. Equity Analysis: How to Advise Companies on Financing
Debt vs. Equity Analysis: How to Advise Companies on Financing
Published: 2017/02/14
Channel: Mergers & Inquisitions / Breaking Into Wall Street
Understanding Debt vs. Equity Financing with Bond Street
Understanding Debt vs. Equity Financing with Bond Street
Published: 2015/10/13
Channel: Skillshare
Understanding Debt vs Equity Financing (Part 4)
Understanding Debt vs Equity Financing (Part 4)
Published: 2016/04/05
Channel: Bond Street
Financing Renewable Energy Projects:  Introduction to Tax Equity Finance for Solar and Wind Projects
Financing Renewable Energy Projects: Introduction to Tax Equity Finance for Solar and Wind Projects
Published: 2017/03/01
Channel: Lehigh Univ Energy Systems Engineering Institute
BIG MONEY: Private and Equity Financing | TIFF Industry Conference 2013
BIG MONEY: Private and Equity Financing | TIFF Industry Conference 2013
Published: 2014/03/13
Channel: TIFF Originals
Real Estate Investing Tips-Equity Finance vs Debt Financing
Real Estate Investing Tips-Equity Finance vs Debt Financing
Published: 2011/06/23
Channel: HIS Capital Group, LLC
Debt vs. Equity Financing
Debt vs. Equity Financing
Published: 2015/08/11
Channel: Accion in the U.S.
Episode 123: Introduction to Debt and Equity Financing
Episode 123: Introduction to Debt and Equity Financing
Published: 2013/08/01
Channel: Alanis Business Academy
Housing equity loans | Housing | Finance & Capital Markets | Khan Academy
Housing equity loans | Housing | Finance & Capital Markets | Khan Academy
Published: 2008/03/15
Channel: Khan Academy
debt financing and equity financing
debt financing and equity financing
Published: 2016/12/04
Channel: Hana R
Hedge funds, venture capital, and private equity | Finance & Capital Markets | Khan Academy
Hedge funds, venture capital, and private equity | Finance & Capital Markets | Khan Academy
Published: 2011/04/19
Channel: Khan Academy
Learn About Equity Financing in a Small Business
Learn About Equity Financing in a Small Business
Published: 2013/08/06
Channel: Association of Accredited Small Business Consultants®
Debt Vs Equity Financing - Financial Management - Ratio Analysis
Debt Vs Equity Financing - Financial Management - Ratio Analysis
Published: 2015/12/28
Channel: CA N Raja Natarajan
debt and equity financing in business
debt and equity financing in business
Published: 2016/11/30
Channel: fadi lah
What is the difference between debt vs equity funding?
What is the difference between debt vs equity funding?
Published: 2016/03/09
Channel: Estate Baron
Debt vs. Equity: the shifting moods of finance
Debt vs. Equity: the shifting moods of finance
Published: 2017/06/12
Channel: FT Transact
Cost of Capital and Cost of Equity | Business Finance
Cost of Capital and Cost of Equity | Business Finance
Published: 2014/12/04
Channel: Spoon Feed Me
What Is a Home Equity Loan? | Financial Terms
What Is a Home Equity Loan? | Financial Terms
Published: 2012/01/18
Channel: Howcast
Debt vs Equity Finance
Debt vs Equity Finance
Published: 2016/08/29
Channel: Edumecate
Basics of Equity Financing
Basics of Equity Financing
Published: 2015/08/11
Channel: Pujee Platform
ACCA F9 Sources of Finance – Equity
ACCA F9 Sources of Finance – Equity
Published: 2017/05/12
Channel: OpenTuition
Stockholders
Stockholders' Equity (Financial Accounting)
Published: 2014/02/11
Channel: Edspira
Private Equity Deal Financing
Private Equity Deal Financing
Published: 2015/07/22
Channel: TheDealVideo
Debt and Equity Financing
Debt and Equity Financing
Published: 2017/11/20
Channel: Melissa Shirah
Debt vs Equity For Business Growth Finance
Debt vs Equity For Business Growth Finance
Published: 2013/09/17
Channel: cashflowkungfu
12 Steps of Equity Financing Steps 1-4
12 Steps of Equity Financing Steps 1-4
Published: 2017/09/25
Channel: Four Colors of Money for Entrepreneurs
Accounting 101 Part 03 Assets Liabilities Equity
Accounting 101 Part 03 Assets Liabilities Equity
Published: 2008/10/01
Channel: enlight09
Equity Fincancing
Equity Fincancing
Published: 2010/06/12
Channel: Quatere
Principles of Financial Modelling for Private Equity
Principles of Financial Modelling for Private Equity
Published: 2013/02/11
Channel: PECareersCentre
Global Equity Finance - Smarter Home Loans, Happier Home Owners
Global Equity Finance - Smarter Home Loans, Happier Home Owners
Published: 2015/01/28
Channel: Global Equity Finance
Difference between Debt and Equity
Difference between Debt and Equity
Published: 2016/08/18
Channel: CA N Raja Natarajan
Sources of Financing and Equity
Sources of Financing and Equity
Published: 2014/11/02
Channel: kenneth nichols
Métier Finance - Equity Finance Trader - SGCIB
Métier Finance - Equity Finance Trader - SGCIB
Published: 2015/03/04
Channel: ESILV
Crash Course:  Equity Financing in the Mining Sector
Crash Course: Equity Financing in the Mining Sector
Published: 2013/01/18
Channel: TheVentureRadar
Global Equity Finance, Mortgage Broker and Lender, Offers Employees a Great Place to Work
Global Equity Finance, Mortgage Broker and Lender, Offers Employees a Great Place to Work
Published: 2015/02/04
Channel: Global Equity Finance
Financial Market | Equity | Debenture | Hindi
Financial Market | Equity | Debenture | Hindi
Published: 2017/01/07
Channel: Intellectual Indies
Equity Financing Advice
Equity Financing Advice
Published: 2013/02/20
Channel: BTV Business Television
Stockholders
Stockholders' equity financial accounting cpa exam ch 11 p 1
Published: 2016/10/11
Channel: Farhat's Accounting Lectures
When is Convertible Debt Preferable to Equity Financing a Startup - Dan Street
When is Convertible Debt Preferable to Equity Financing a Startup - Dan Street
Published: 2011/06/07
Channel: Capture Your Flag
Bespoke Bridging Loans For Business, Property Development & Equity Finance
Bespoke Bridging Loans For Business, Property Development & Equity Finance
Published: 2013/05/28
Channel: busyvids
Affordable Equity Finance - Springfield, MO
Affordable Equity Finance - Springfield, MO
Published: 2011/03/26
Channel: yellowbook
Return On Equity
Return On Equity
Published: 2017/03/14
Channel: The Finance Storyteller
Equity finance Information ।। home loan Information ।। car loan Information
Equity finance Information ।। home loan Information ।। car loan Information
Published: 2016/10/20
Channel: Home Loan
Which Is An Advantage Of Equity Financing Over Debt Financing?
Which Is An Advantage Of Equity Financing Over Debt Financing?
Published: 2017/07/04
Channel: sparky Business
NEXT
GO TO RESULTS [51 .. 100]

WIKIPEDIA ARTICLE

From Wikipedia, the free encyclopedia
Jump to: navigation, search

In accounting, equity (or owner's equity) is the difference between the value of the assets and the value of the liabilities of something owned. It is governed by the following equation:

For example, if someone owns a car worth $15,000 (an asset), but owes $5,000 on a loan against that car (a liability), the car represents $10,000 of equity. Equity can be negative if liabilities exceeds assets. Shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the equity of a company as divided among shareholders of common or preferred stock. Negative shareholders' equity is often referred to as a shareholders' deficit.

Alternatively, equity can also refer to the capital stock of a corporation. The value of the stock depends on the corporation's future economic prospects. For a company in liquidation proceedings, the equity is that which remains after all liabilities have been paid.

Owner's equity[edit]

When starting a business, the owners fund the business to finance various operations. Under the model of a private limited company, the business and its owners are separate entities, so the business is considered to owe these funds to its owners as a liability in the form of share capital. Throughout the business's existence, the equity of the business will be the difference between its assets and debt liabilities; this is the accounting equation.

When a business liquidates during bankruptcy, the proceeds from the assets are used to reimburse creditors. The creditors are ranked by priority, with secured creditors being paid first, other creditors being paid next, and owners being paid last. Owner's equity (also known as risk capital or liable capital) is this remaining or residual claim against assets, which is paid only after all other creditors are paid. In such cases where even creditors could not get enough money to pay their bills, the owner's equity is reduced to zero because nothing is left to reimburse it.

Accounting[edit]

In financial accounting, owner's equity consists of the net assets of an entity. Net assets is the difference between the total assets and total liabilities.[1] Equity appears on the balance sheet (also known as the statement of financial position), one of the four primary financial statements.

The assets of an entity can be both tangible and intangible items. Intangible assets include items such as brand names, copyrights or goodwill. Tangible assets include land, equipment, and cash. The types of accounts and their description that comprise the owner's equity depend on the nature of the entity and may include:

Book value[edit]

The book value of equity will change in the case of the following events:

  • Changes in assets relative to liabilities. For example, a profitable firm receives more cash for its products than the cost at which it produced these goods, and so in the act of making a profit, increases its retained earnings, therefore its shareholders' equity.
  • Issue of new equity in which the firm obtains new capital increases the total shareholders' equity.
  • Share repurchases, in which a firm returns money to investors, reducing on the asset side its financial assets, and on the liability side the shareholders' equity. For practical purposes (except for its tax consequences), share repurchasing is similar to a dividend payment. Rather than giving money to all shareholders immediately in the form of a dividend payment, a share repurchase reduces the number of shares outstanding.
  • Dividends paid out to preferred stock owners are considered an expense to be subtracted from net income[citation needed](from the point of view of the common share owners).
  • Other reasons - Assets and liabilities can change without any effect being measured in the Income Statement under certain circumstances; for example, changes in accounting rules may be applied retroactively. Sometimes assets bought and held in other countries get translated back into the reporting currency at different exchange rates, resulting in a changed value.

Shareholders' equity[edit]

When the owners are shareholders, the interest can be called shareholders' equity; the accounting remains the same, and it is ownership equity spread out among shareholders. If all shareholders are in one and the same class, they share equally in ownership equity from all perspectives. However, shareholders may allow different priority ranking among themselves by the use of share classes and options. This complicates analysis for both stock valuation and accounting.

Shareholders' equity is obtained by subtracting total liabilities from the total assets of the shareholders.[3] These assets and liabilities can be:

  • Equity (beginning of year)
  • + net income
  • − dividends
  • +/− gain/loss from changes to the number of shares outstanding.
  • = Equity (end of year) if one gets more money during the year or less or not anything

Equity stock[edit]

Equity investments[edit]

An equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains. Typically, equity holders receive voting rights, meaning that they can vote on candidates for the board of directors (shown on a diversification of the fund(s) and to obtain the skill of the professional fund managers in charge of the fund(s). An alternative, which is usually employed by large private investors and pension funds, is to hold shares directly; in the institutional environment many clients who own portfolios have what are called segregated funds, as opposed to or in addition to the pooled mutual fund alternatives.

A calculation can be made to assess whether an equity is over or underpriced, compared with a long-term government bond. This is called the yield gap or Yield Ratio. It is the ratio of the dividend yield of an equity and that of the long-term bond.

Market value of equity stock[edit]

In the stock market, market price per share does not correspond to the equity per share calculated in the accounting statements. Equity stock valuations, which are often much higher, are based on other considerations related to the business' operating cash flow, profits and future prospects; some factors are derived from the accounting statement. While accounting equity can potentially be negative, market price per share is always positive since equity shares represent ownership in limited liability companies. The principal of limited liability guarantees that a shareholder's losses may never exceed her investment.

Merton model[edit]

In the Merton model, the value of stock equity is modeled as a call option on the value of the whole company (including the liabilities), struck at the nominal value of the liabilities.[4]

In this model, the equity market value depends on the volatility of the market value of the company assets: the greater the volatility, the lower the equity market value.

Equity in real estate[edit]

The notion of equity with respect to real estate comes the equity of redemption. This equity is a property right valued at the difference between the market value of the property and the amount of any mortgage or other encumbrance.

See also[edit]

References[edit]

  1. ^ IFRS Framework quotation: International Accounting Standards Board F.49(c)
  2. ^ Example of Balance Sheet
  3. ^ Hervé Stolowy; Michel Lebas (January 2006). Financial Accounting and Reporting: A Global Perspective. Cengage Learning EMEA. p. 42. ISBN 1-84480-250-7. 
  4. ^ Merton, Robert C. (1974). "On the Pricing of Corporate Debt: The Risk Structure of Interest Rates". Journal of Finance. 29 (2): 449–470. 

Disclaimer

None of the audio/visual content is hosted on this site. All media is embedded from other sites such as GoogleVideo, Wikipedia, YouTube etc. Therefore, this site has no control over the copyright issues of the streaming media.

All issues concerning copyright violations should be aimed at the sites hosting the material. This site does not host any of the streaming media and the owner has not uploaded any of the material to the video hosting servers. Anyone can find the same content on Google Video or YouTube by themselves.

The owner of this site cannot know which documentaries are in public domain, which has been uploaded to e.g. YouTube by the owner and which has been uploaded without permission. The copyright owner must contact the source if he wants his material off the Internet completely.

Powered by YouTube
Wikipedia content is licensed under the GFDL and (CC) license