How are assets and liabilities related to equity?

Asked by Whitley Lawson

Equity is also referred to as net worth or capital and shareholders equity. This equity becomes an asset as it is something that a homeowner can borrow against if need be. You can calculate it by deducting all liabilities from the total value of an asset: (Equity = Assets – Liabilities).

Michaela Harris, BA Contributor
Michaela Harris
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