What
is equity?
Equity is the residual
interest of the equity holder or share holder. Equity is represent by the paid
up share capital, retained earnings, revaluation surplus. In simple term equity
is the amount which shall be distributed among the shareholder in case of
liquidation.
What
is relationship between equity and share price?
If company equity is
rising, it means that its share price should also rise, because equity
represents the shareholder rights. Theoretical share price should be the equity
divided by number of share issued by entity.
What
is difference between equity and capital?
Capital means the nominal values
of issued share capital, where the equity is residual value of interest or
current value of that investment. It
means that share capital would remain constant, but equity changes over the
period of time due to profit or loss.
What
is relationship between equity and profit?
Generally Equity will rise
with the profit and reduces with losses, but this is the in case no dividend is
being paid, equity has more direct
relation with payment of dividend , if all profit earned paid as divided then
there will be no change in equity.
