| Equity has a number of meanings including fairness in law and the value of a property less outstanding debts on the property. Most commonly, it is the amount that shareholders own, in the form of common or preferred stock, in a publicly quoted company. Equity is the risk-bearing part of the company's capital and contrasts with debt capital which is usually secured in some way and which has priority over shareholders if the company becomes insolvent and its assets are distributed. For most companies there are two types of equity: ordinary shares, which have voting rights, and preference shares which do not. Owners of preference shares rank ahead of ordinary shareholders in a liquidation.
|
