What is Equity?

Last Updated On -13 May 2026

Equity holds a broad meaning across various fields, including finance, accounting, real estate, and social justice. Equity is an essential concept in multiple fields, from financial equity in business to homeownership or societal fairness. Comprehending equity helps make informed decisions and promotes a just and equitable system.

Want to learn about the topic in depth? Our Equity Shares article will help you!

What are the types of Equity?

Equity has spread meaning throughout multiple fields, from finance to social justice.

Here’s a list of key types of equity:

Financial Equity
Equity in Accounting
Equity in Social Justice & Governance

1. Financial Equity

Financial equity refers to ownership in the company concerning the stock market. When a person buys the shares of a company, they become a partial owner and are entitled to a portion of profit and dividend rights.

Shareholder’s Equity

The ownership interests in a company after the liabilities are deducted from the assets
They are found in the company’s balance sheet
If a business earns 10 crores in assets and 4 crores in liabilities, its equity is 6 crore

Formula to Calculate Equity in a Business:

Equity

Assets - Liabilities

Private Equity

Investment in private companies
When venture capital firms or angel investors fund start-ups or businesses
If a venture capitalist invests in a new tech startup

Public Equity

Investment in shares of a company listed on the stock market
Investors can buy and access the shares easily over the stock exchange
If an investor buys the shares of Reliance Industries or TCS

Home Equity

Value of the property after deducting any outstanding loan amount
If the worth of a house is 1 crore and the mortgage is 40 lakh, the owner’s equity will be 60 lakh

Formula to Calculate Home Equity:

Home Equity

Market Value of Home - Loan Amount

2. Equity in Accounting

Equity in accounting is the difference between a company’s assets and liabilities. It represents the owner’s stake.

Retained Earnings

When a company reinvests the earned profit instead of distributing it as dividends
A company earns 5 crore as profit and retains 2 crore for expansion

Preferred Equity

Preferred equity is a mix between debt and common stock, offering fixed dividends but limited voting rights
When the investors hold preferred shares.

3. Equity in Social Justice & Governance

Equity is not only about financial and accounting systems but also about the social justice system. Equity ensures that everyone gets the resources based on their needs under specific circumstances

Educational Equity

Ensures fair access in terms of education regardless of economic background
The scholarships for students from underprivileged communities

Gender Equity

Provides equal opportunities and rights to all genders
Equal pay for men and women in the same job role

Health Equity

Provides fair distribution of healthcare services to everyone.
Government programs offer free vaccinations to low-income families

The Core of Ownership: Understanding Equity

In the professional world of Chartered Accountancy (CA) and Company Secretaryship (CS), Equity is the ultimate measure of value and ownership. Whether we are looking at a startup's balance sheet or a global corporation's stock performance, equity represents the "residual interest"—what remains for the owners after all debts are paid. At IIC Lakshya, we teach our students that equity is more than just money; it is about rights, risks, and rewards.