Equity

In finance, equity means owner’s claim in business. It can say also the capital of owner. Its other name is owner’s equity. Owner in small business may be individual and can do business with his family members. At that time, his invested money in business will be his equity but if he has gotten secured loan from outside, then total equity will divide into two parts one is owner’s equity and other is creditor’s equity. Due to his business has unlimited liability, so his own equity can be used for payment of secured loan in case of insolvency.
The definition of equity will change in case of purchasing of other company’s shares. After purchasing other company’s share, company’s equity will be the total amount of equity share capital. It is also called shareholder’s equity. Large numbers of businessmen are using equity for succeeding in company type business.
They make company just getting fund in the form of share capital, after getting fund, they operate business, and then if they need money they take only loan not share capital. That technique is called trading on equity. One more thing, I have reminded that owner’s claim will be junior claim but liability of shareholder will be limited.