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Financial Terms | |
Equity |
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Definition of EquityEquityAmounts contributed to the company by the owners (contributed capital) plus the residual earnings of the business (retained earnings). EquityFunds raised from shareholders. EquityOwnership. Common stock represents equity in a corporation. equityRefers to one of the two basic sources of capital for a business, the EquityRepresents ownership interest in a firm. Also the residual dollar value of a futures trading account, EquityThe difference between the total of all recorded assets and liabilities on the balance EquityThe net worth of a business, consisting of capital stock, capital (or paid-in) surplus (or retained earnings), and, occasionally, certain net worth reserves. Common equity is that part of the total net worth belonging to the common shareholders. Total equity includes preferred shareholders. The terms common stock, net worth, and common equity are frequently used interchangeably. equityThe net worth of a company. This represents the ownership interest of the shareholders (common and preferred) of a company. For this reason, shares or stocks are often known as equities.
Related Terms:![]() All equity rateThe discount rate that reflects only the business risks of a project and abstracts from the Asset/equity ratioThe ratio of total assets to stockholder equity. Bottom-up equity management styleA management style that de-emphasizes the significance of economic Common stock/other equityValue of outstanding common shares at par, plus accumulated retained Contra-equity accountAn account that reduces an equity account. An example is Treasury stock. Cost of EquitySame as the cost of common stock. Sometimes viewed as the Debt/equity ratioIndicator of financial leverage. Compares assets provided by creditors to assets provided Debt/Equity RatioA comparison of debt to equity in a company's capital structure. debt-to-equity ratioA widely used financial statement ratio to assess the ![]() Deferred equityA common term for convertible bonds because of their equity component and the Dual syndicate equity offeringAn international equity placement where the offering is split into two Equity-based insuranceLife insurance or annuity product in which the cash value and benefit level fluctuate according to the performance of an equity portfolio. Equity Buy-BackRefers to the investors percentage ownership of a company that can be re-acquired by the company, usually at a pre-determined amount. Equity capAn agreement in which one party, for an upfront premium, agrees to compensate the other at Equity claimAlso called a residual claim, a claim to a share of earnings after debt obligation have been Equity collarThe simultaneous purchase of an equity floor and sale of an equity cap. Equity contribution agreementAn agreement to contribute equity to a project under certain specified Equity floorAn agreement in which one party agrees to pay the other at specific time periods if a specific Equity investmentThrough equity investment, investors gain part ownership of the corporation. The primary type of equity investment is corporate stock. Equity kickerUsed to refer to warrants because they are usually issued attached to privately placed bonds. ![]() Equity-linked policiesRelated: Variable life Equity marketRelated:Stock market Equity MethodAccounting method for an equity security in cases where the investor has sufficient Equity multiplierTotal assets divided by total common stockholders' equity; the amount of total assets per Equity optionsSecurities that give the holder the right to buy or sell a specified number of shares of stock, at Equity SecurityAn ownership interest in an enterprise, including preferred and common stock. Equity swapA swap in which the cash flows that are exchanged are based on the total return on some stock EquityholdersThose holding shares of the firm's equity. Euroequity issuesSecurities sold in the Euromarket. That is, securities initially sold to investors Foreign equity marketThat portion of the domestic equity market that represents issues floated by foreign companies. GEMs (growing-equity mortgages)Mortgages in which annual increases in monthly payments are used to Investor's equityThe balance of a margin account. Related: buying on margin, initial margin requirement. Leveraged equityStock in a firm that relies on financial leverage. Holders of leveraged equity face the Long-term debt to equity ratioA capitalization ratio comparing long-term debt to shareholders' equity. owners' equityRefers to the capital invested in a business by its shareowners Owners' equityThe total of all capital contributions and retained earnings on a business’s Preferred equity redemption stock (PERC)Preferred stock that converts automatically into equity at a Quasi-EquityFunds, other than paid-up capital and retained earnings, employed in a business and which will remain in a business as permanent capital. RATE OF RETURN ON STOCKHOLDERS’ EQUITYThe percentage return or profit that management made on each dollar stockholders invested in a company. Here’s how you figure it: RATIO OF DEBT TO STOCKHOLDERS’ EQUITYA ratio that shows which group—creditors or stockholders—has the biggest stake in or the most control of a company: Return on Common Equity RatioA measure of the percentage return earned on the value of the Return on equity (ROE)Indicator of profitability. Determined by dividing net income for the past 12 return on equity (ROE)This key ratio, expressed as a percent, equals net Shareholder's EquityRepresents the total assets of a corporation less liabilities. Shareholders' equityThis is a company's total assets minus total liabilities. A company's net worth is the Shareholders' equityThe total amount of contributed capital and retained earnings; synonymous with stockholders' equity. Shareholders' EquityThe residual interest or owners' claims on the assets of a corporation Stockholder equityBalance sheet item that includes the book value of ownership in the corporation. It Stockholder's equityThe residual claims that stockholders have against a firm's assets, calculated by Stockholders' equityThe total amount of contributed capital and retained earnings; synonymous with shareholders’ equity. stockholders' equity, statement of changes inAlthough often considered STOCKHOLDERS’ (OR OWNERS’) EQUITYThe value of the owners’ interests in a company. Stratified equity indexingA method of constructing a replicating portfolio in which the stocks in the index Top-down equity management styleA management style that begins with an assessment of the overall Total debt to equity ratioA capitalization ratio comparing current liabilities plus long-term debt to Accounting equationThe formula Assets = Liabilities + equity. accounting equationAn equation that reflects the two-sided nature of a Accrued IncomeIncome that has been earned but not yet received. For instance, if you have a non-registered Guaranteed Investment Certificate (GIC), Mutual Fund or Segregated equity Fund, growth accrues annually or semi-annually and is taxable annually even though the gain is only paid at maturity of your investment. Accumulated Other Comprehensive IncomeCumulative gains or losses reported in shareholders' Adjusted present value (APV)The net present value analysis of an asset if financed solely by equity Asset-based financingMethods of financing in which lenders and equity investors look principally to the Asset CoverageExtent to which a company's net assets cover a particular debt obligation, class of preferred stock, or equity position. Attribute biasThe tendency of stocks preferred by the dividend discount model to share certain equity Available-for-Sale SecurityA debt or equity security not classified as a held-to-maturity security or a trading security. Can be classified as a current or noncurrent investment depending on the intended holding period. Balance sheetAlso called the statement of financial condition, it is a summary of the assets, liabilities, and BALANCE SHEETA “snapshot” statement that freezes a company on a particular day, like the last day of the year, and shows the balances in its asset, liability, and stockholders’ equity accounts. It’s governed by the formula: Balance SheetOne of the basic financial statements; it lists the assets, liabilities, and equity accounts of the company. The Balance Sheet is prepared using the balances at the end of a specific day. balance sheetA term often used instead of the more formal and correct Balance sheetA report that summarizes all assets, liabilities, and equity for a company Balance SheetA financial report showing the status of a company's assets, liabilities, and owners' equity on a given date. Balance sheet identityTotal Assets = Total Liabilities + Total Stockholders' equity Binomial modelA method of pricing options or other equity derivatives in Book ValueThe value of an asset as carried on the balance sheet of a book value and book value per shareGenerally speaking, these terms BOOK VALUE OF COMMON STOCKThe theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals: Book value per shareThe ratio of stockholder equity to the average number of common shares. Book value capitalA very broad term rooted in economic theory and referring to Capital employedThe total of debt and equity, i.e. the total funds in the business. capital expendituresRefers to investments by a business in long-term Capital structureThe makeup of the liabilities and stockholders' equity side of the balance sheet, especially Capital StructureThe mix of the various types of debt and equity capital maintained by a firm. The more debt capital a firm has in its capital structure, the more highly leveraged the firm is considered to be. capital structure, or capitalizationTerms that refer to the combination of Capital surplusAmounts of directly contributed equity capital in excess of the par value. CapitalizationThe debt and/or equity mix that fund a firm's assets. CapitalizationThe total amount of debt and equity issued by a company. Capitalization ratiosAlso called financial leverage ratios, these ratios compare debt to total capitalization Capitalization tableA table showing the capitalization of a firm, which typically includes the amount of Cash Flow Provided or Used from Financing ActivitiesCash receipts and payments involving CASH FLOWS FROM OPERATIONSA section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business. Cash offerA public equity issue that is sold to all interested investors. Common SharesAre equity instruments that take no security against assets, have no fixed terms of repayment and pay no fixed dividends. Common stockThese are securities that represent equity ownership in a company. Common shares let an Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |