"Equity" is the part of a company's assets that is not financed with funds from third parties (through debt). It represents the capital that has been contributed to the company by the owners and is not subject to a repayment obligation, in contrast to debt.

Equity can increase through the issuance of new shares or the generation of profit, and decrease through the repurchase of own shares, loss, or distributions to shareholders (dividend). In the case of sole proprietorships, equity is affected by private withdrawals and deposits.

Equity is considered the owners' claim on the assets of the company and is therefore also called 'permanent capital', since there is no obligation to repay it.