owner's equity

Definition

The amount of ownership an individual or company has in an asset. The formula is

Owner's Equity = Total assets - Total liabilities

For example, if a home is worth $200,000 and the owner owes the bank $150,000, the owner's equity is $50,000.

For a company, this is also called net worth or shareholders' equity or net assets.

Use owner's equity in a sentence

Owner's of any property desire to have positive owner's equity rather than a negative equity amount because that means that your total assets exceed your total liabilities.

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