Overview

Equity refers to the value contributed by the owners of a company, and the owners can be either the shareholders, stockholders, or founder/owner of the business. There are two common types of equity:

1. Book value of equity is the difference between the total assets and total liabilities on a company's balance sheet. It is the figure reflected in the book of the business. 2. Market value of equity is determined by the current share price of a public company and can be lower or higher than the book value of equity. This value reflects the market's expectation on how the company will perform financially in the future. This figure is often used in valuation to compare with a company's target price.

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