equity

noun
eq·​ui·​ty | \ ˈe-kwə-tē How to pronounce equity (audio) \
plural equities

Definition of equity

1a : justice according to natural law or right specifically : freedom from bias or favoritism
b : something that is equitable
2a : the money value of a property or of an interest in a property in excess of claims or liens against it
b : the common stock of a corporation
c : a risk interest or ownership right in property
d : a right, claim, or interest existing or valid in equity
3a : a system of law originating in the English chancery and comprising a settled and formal body of legal and procedural rules and doctrines that supplement, aid, or override common and statute law and are designed to protect rights and enforce duties fixed by substantive law
b : trial or remedial justice under or by the rules and doctrines of equity
c : a body of legal doctrines and rules developed to enlarge, supplement, or override a narrow rigid system of law

Keep scrolling for more

Examples of equity in a Sentence

In making these decisions we should be governed by the principle of equity. We've been slowly paying off our mortgage and building up equity in our house.

Recent Examples on the Web

Speakers include Gilda Gonzales, CEO of Planned Parenthood Northern California; Arneta Rogers, reproductive justice and gender equity attorney with the American Civil Liberties Union of Northern California; and San Francisco Supervisor Vallie Brown. SFChronicle.com, "Bay Area political events: Scott Wiener, Ro Khanna," 7 June 2019 As Deutch went through a string of legislation passed by Democrats in the House — campaign reform, LGBT civil rights, path to citizenship for dreamers, pay equity for women, background checks for firearm purchases — the audience applauded for each. Anthony Man, sun-sentinel.com, "At South Florida town hall, congressman urges cautious approach toward impeaching Trump," 7 June 2019 Scoot was last valued at approximately $71 million, having raised about $47 million in equity funding to date from Scout Ventures, Vision Ridge Partners, and Joanne Wilson. Polina Marinova, Fortune, "Term Sheet -- Thursday, June 6," 6 June 2019 Takada cited the sharp deterioration in an internal equity sentiment index, which is calculated by the Nomura macro and quant strategy teams and is based on unspecified market data. Matt Egan, CNN, "Swings in market sentiment resemble pre-Lehman crisis, strategist warns," 6 June 2019 Topics to be addressed include dance equity issues, new theater technology, and the arts of dance finance and management. Zachary Lewis, cleveland.com, "Dance world heads to Cleveland for Dance/USA 2019 Annual Conference," 6 June 2019 In addition, Silver could invoke Article 35A, which concerns the behavior of non-players, including those with equity interests in an NBA franchise. Michael Mccann, SI.com, "Could Warriors Strip Mark Stevens of His Minority Stake After Kyle Lowry Shove?," 6 June 2019 And the original owners of the Teak Thai Cuisine Bar at 1051 Saint Gregory St. have already invested time, money and their own sweat-equity into the latest Mount Adams' renaissance. Randy Tucker, Cincinnati.com, "Original Teak owners hope to lead Mount Adams' comeback with new restaurant," 5 June 2019 Considered the wealthiest black man in the United States, Smith founded Vista Equity Partners, a private equity firm that is estimated to manage about $46 billion in assets. Lauren Hubbard, Town & Country, "Billionaire Robert F. Smith Will Pay Off the Student Debt of Morehouse College's 2019 Graduates," 20 May 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'equity.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

See More

First Known Use of equity

14th century, in the meaning defined at sense 1a

History and Etymology for equity

Middle English equite, from Anglo-French equité, from Latin aequitat-, aequitas, from aequus equal, fair

Keep scrolling for more

Learn More about equity

Statistics for equity

Last Updated

10 Jun 2019

Look-up Popularity

Time Traveler for equity

The first known use of equity was in the 14th century

See more words from the same century

Keep scrolling for more

More Definitions for equity

equity

noun

Financial Definition of equity

What It Is

Put simply, equity is ownership.

In the trading world, equity refers to stock. In the accounting and corporate lending world, equity (or more commonly, shareholders’ equity) refers to the amount of capital contributed by the owners or the difference between a company’s total assets and its total liabilities.

In the real estate world, equity refers to the difference between an asset’s market value and the debt owed on the asset.

How It Works

The two most common types of equities traders encounter are common stock and preferred stock. Share certificates bearing the name of the shareholder, the number of shares, and the name of the company represent these equities, or shares. The number of shares a corporation is authorized to issue is outlined in its corporate charter. When a company decides to sell additional shares to new or existing shareholders, this is sometimes called raising equity.

Although shareholder rights vary by company, one of the most prominent characteristics of equity is that it entitles the owner to vote on certain matters and to do so in proportion to the number of shares he or she owns. The company’s articles of incorporation and bylaws determine the number of votes each share is entitled to.

As you can see in the sample balance sheet for XYZ Company, equity is generally broken out into the par value of the shares outstanding, any additional paid in capital, and any earnings retained by the company.

Why It Matters

Equity holders enjoy voting rights and other privileges that only come with ownership, because equity represents a claim on a proportionate share of a company’s assets and earnings. These claims are generally subordinate to lenders’ claims, but only equity holders can truly participate in and benefit from growth in the value of the enterprise.

Some financial instruments have equity characteristics but are not actually equity. Convertible debt instruments, for example, represent loans that convert into shares when a company (the borrower) crosses certain thresholds, thereby turning a lender into an owner in certain events. Stock options also act like equity in that their value changes with the value of the underlying shares, but the option holders generally do not have voting rights and are not eligible to receive the dividends or other distributions made to bona fide equity holders.

It is important to understand that although balance sheet equity represents the company’s net worth, the company’s shares are ultimately worth only what buyers are willing to pay for them.

Source: Investing Answers

equity

noun

English Language Learners Definition of equity

formal : fairness or justice in the way people are treated
: the value of a piece of property (such as a house) after any debts that remain to be paid for it (such as the amount of a mortgage) have been subtracted
: a share in a company : a share of a company's stock

equity

noun
eq·​ui·​ty | \ ˈe-kwə-tē How to pronounce equity (audio) \
plural equities

Legal Definition of equity

1a : justice according to fairness especially as distinguished from mechanical application of rules prompted by considerations of equity comity between nations, and equity require it to be paid for— F. A. Magruder
b : something that is equitable : an instance of equity the inequities produced by the system are outnumbered by the equities
2a : a system of law originating in the English chancery and comprising a settled and formal body of substantive and procedural rules and doctrines that supplement, aid, or override common and statutory law the judicial power shall extend to all cases, in law and equity, arising under this ConstitutionU.S. Constitution art. III — see also chancery — compare common law, law

Note: The courts of equity arose in England from a need to provide relief for claims that did not conform to the writ system existing in the courts of law. Originally, the courts of equity exercised great discretion in fashioning remedies. Over time, they established precedents, rules, and doctrines of their own that were distinct from those used in the courts of law. Although for a time the courts of equity rivaled the law courts in power, the law courts maintained an advantage partly as a result of forcing the equity courts to hear only those cases for which there was no adequate remedy at law. The courts of law and equity were united in England in 1873. Courts of equity also developed in the United States, but in most states and in the federal system courts of law and courts of equity have been joined. The courts apply both legal and equitable principles and offer both legal and equitable relief, although generally equitable relief is still granted when there is no adequate remedy at law.

b : the principles that developed in the courts of equity : justice in accordance with equity equity treats a devisee who procures a will by fraud as a constructive trustee— W. M. McGovern, Jr. et al. also : justice in accordance with natural law
c : a court of equity sat alone for some time in equity— O. W. Holmes, Jr.
3 : a body of doctrines and rules developed to enlarge, supplement, or override any narrow or rigid system of law
4a : a right, claim, or interest existing or valid in equity
b : the money value of a property or of an interest in property in excess of any claims or liens (as mortgage indebtedness) against it
c : a risk interest or ownership right in property specifically : the ownership interests of shareholders in a company
d : the common stock of a corporation — compare asset, debt

History and Etymology for equity

Latin aequitat- aequitas fairness, justice, from aequus equal, fair

Keep scrolling for more

Comments on equity

What made you want to look up equity? Please tell us where you read or heard it (including the quote, if possible).

WORD OF THE DAY

behavior toward others

Get Word of the Day daily email!

Test Your Vocabulary

Words for Summer: A Quiz

  • a closeup of a sunflower
  • Which of the following words means “of or relating to summer”?
Name That Thing

Test your visual vocabulary with our 10-question challenge!

TAKE THE QUIZ
Add Diction

Test Your Knowledge - and learn some interesting things along the way.

TAKE THE QUIZ
Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!