Equity

As Noun-:

The value of the shares issued by a company. In accounting, equity (or owner's equity) is the difference between the value of the assets and the value of the liabilities of something owed.

As a formula we will say Like That-:

Total assets – Total Liabilities = Equity

It explains more than mean upper said meaning.

Meaning-:

The owner's equity depends on the nature of the entity and may include Share capital, Preferred Stocks, Capital surplus, Retained earnings, Treasury stock, Stock options, Reserve etc.The book value of equity will change in the case of the following events: Changes in assets relative to liabilities, Issue of new equity in which the firm obtains new capital increases the total shareholders' equity, Share repurchases in which a firm returns money to investors, reducing on the asset side its financial assets, and on the liability side the shareholders' equity. Dividends paid out to preferred stock owners are considered an expense to be subtracted from net income.

i.e. Equity is nothing but ownership; ownership in Business. For Ex. if you hold 10 shares of PQR Company out of total 1000 shares floated by the company – you are 1% owner in PQR’s business. So if PQR will make profit you will get your share from dividends and price appreciation but if company makes losses your capital will go down (that will be reflected in stock price). A general question – If we ask you to start your own new business, how much time do you think you would like to give before you start thinking whether it’s really worth it or not- 1 Week, 1 month, 1 year. You must be thinking that we are joking. Ideally we should think for some long time when we enter in any legitimate business. But this common principle we don’t really apply when we invest in other’s business which can be done through shares/equities.