Definitions (3)
Related Terms
1. Fairness and impartiality towards all concerned, based on the principles of evenhanded dealing. Equity implies giving as much advantage, consideration, or latitude to one party as it is given to another. Along with economy, effectiveness, and efficiency, Equity is essential for ensuring that extent and costs of funds, goods and services are fairly divided among their recipients. See also equitable.
2. Accounting: (1) Ownership interest or claim of a holder of common stock (ordinary shares) and some types of preferred stock (preference shares) of a company.
On a balance sheet, equity represents funds contributed by the owners (stockholders) plus retained earnings or minus the accumulated losses. (2) Net worth of a person or company computed by subtracting total liabilities from the total assets. In case of cooperatives, equity represents members' investment plus retained earnings or minus losses.
3. Law: (1) The English system of justice that developed during 17th to 19th centuries, separate and distinct from the system of common law. Not bound by the precedents, it tempered the harshness and inflexibility of common law, especially in cases involving families and children. Although both systems of law merged by 1875, the rules of equity prevail in case of a conflict with the rules of common law. (2) Any right to an asset or property, held by a creditor, proprietor, or stockholder (shareholder).

Use 'equity' in a Sentence

Without the proper amount of equity, the loan officer would not approve the loan the couple was trying to get for improvements to their house.
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The firm is losing equity very quickly, with projections for the future showing the equity to have a very grim future.
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It is important to treat all students with equity; it is moral unacceptable to allow favorite students to get away with things while less-liked pupils are punished.
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