What is Equity?

In finance and accounting, equity is the value attributable to the owners of a business. The book value of equity is calculated as the difference between assets and liabilities on the company’s balance sheet, while the market value of equity is based on the current share price (if public) or a value that is determined by investors or valuation professionals. The account may also be called shareholders/owners/stockholders equity or net worth.


There are generally two types of equity value:
1.    Book value
2.    Market value

Book value of equity
In accounting, equity is always listed at its book value. This is the value that accountants determine by preparing financial statements and the balance sheet equation that states: assets = liabilities + equity. The equation can be rearranged to: equity = assets – liabilities.


The value of a company’s assets is the sum of each current and non-current asset on the balance sheet. The main asset accounts include cash, accounts receivable, inventory, prepaid expenses, fixed assets, property plant and equipment (PP&E), goodwill, intellectual property, and intangible assets.


The value of liabilities is the sum of each current and non-current liability on the balance sheet. Common liability accounts include lines of credit, accounts payable, short-term debt, deferred revenue, long-term debt, capital leases, and any fixed financial commitment.


In reality, the value of equity is calculated in a much more detailed way and is a function of the following accounts:
•    Share capital
•    Contributed surplus
•    Retained earnings
•    Net income (loss)
•    Dividends


To fully calculate the value, accountants must track all capital the company has raised and repurchased (its share capital), as well as its retained earnings, which consist of cumulative net income minus cumulative dividends. The sum of share capital and retained earnings is equal to equity.


Market value of equity
In finance, equity is typically expressed as a market value, which may be materially higher or lower than the book value. The reason for this difference is that accounting statements are backward-looking (all results are from the past) while financial analysts look forward, to the future, to forecast what they believe financial performance will be.


If a company is publicly traded, the market value of its equity is easy to calculate. It’s simply the latest share price multiplied by the total number of shares outstanding.


If a company is private, then it’s much harder to determine its market value. If the company needs to be formally valued, it will often hire professionals such as investment bankers, accounting firms (valuations group), or boutique valuation firms to perform a thorough analysis.

For more Details visit our main website at this link:
www.maliximarketing.com
For Digital Marketing Proposal Request:
Please Email us at: support@maliximarketing.com
Contact us at: +63917-582-3957 or at +63928-520-0777

Comments

Post a Comment

Popular posts from this blog

Managing your hospital has never been easier

HOSPITAL MANAGEMENT SYSTEM Managing a hospital can be a complex and challenging task. But with our hospital management system, it has never been easier! Our system is designed to streamline your hospital operations, enabling you to manage patient records, appointments, billing, inventory, and more, all in one centralized location. With our intuitive and user-friendly interface, hospital staff can easily navigate and use the system, while also allowing for customization to fit the unique needs of your hospital. Our hospital management system includes features such as automated appointment reminders and patient communication, reducing the burden on hospital staff and improving patient engagement. You can also easily manage inventory levels, set reordering thresholds, and generate reports to help you make informed decisions about inventory management. In addition, our system helps ensure that patient data is accurate and accessible, making it easier to provide timely and effective care. W
Read more

HOW TO COMBINE SERVICE IN COLUMN SALES REPORT IN WELLNESS MANAGEMENT SYSTEM?

In a Wellness Management System, integrating a service column into a sales report is crucial for tracking and analyzing revenue generated from various wellness services offered by the establishment. Here's a more detailed description of how this system function might work:   Service Integration in Sales Report: Service Categorization: Firstly, the system categorizes wellness services offered by the establishment. These services can include massage therapy, fitness classes, spa treatments, nutritional consultations, etc. Service Identification: Each service is assigned a unique identifier within the system for easy tracking. This identifier helps in differentiating between various services and accurately recording sales data. Transaction Recording : When a customer purchases a wellness service, whether it's a one-time session or a package, the transaction is recorded in the system. The transaction includes details such as the service purchased, date and time, custo
Read more

Bullies

I asked my son why he still sleepy thou he just woke up. He cannot even open his eyes. Hes having hard time sitting on bed.  I asked him why his still sleepy. He told me that he cannot sleep, his having hard times sleeping. His mind and eyes were wide open very long hours at night for almost many days.  I was shocked to know that. So, I traced when the many days he stated started. So, when I found out that its almost 3 days.  I asked my son why and what keeps him awake for 3 days each night? Then he commented " The world is full of bullies". I felt sadness in my heart as I hugged him.  I asked him about all the people involved in his bully experiences and what happen during those interactions and what is his reactions. After hearing it i asked him to pray with me. Then decided that every day we will talk about bullies until we learn how to have a positive response about it.  We came up to a decision that we will always pray for those people and in Gods time, i will try my bes
Read more