• Classes
    • High school Tutoring
    • College Tutoring
    • Executive Education
    • QuickBooks
  • Calendar
  • Media
  • Blog
  • About Us
  • Contact
  • Cart
    VirtualProf - Courses online
    • Classes
      • High school Tutoring
      • College Tutoring
      • Executive Education
      • QuickBooks
    • Calendar
    • Media
    • Blog
    • About Us
    • Contact
    • Cart

      Business

      • Home
      • Blog
      • Business
      • What is Owner’s Equity 

      What is Owner’s Equity 

      • Date November 8, 2021

      Occasionally a small business owner, when asked about how much equity they have in their company, responds with their bank account balance. But this is not equity. 

      As an owner of a business, it is good to know your total equity in your company and how it is calculated. Your equity is what you would walk away with if you were to sell or close your business, after all debts are paid and assets liquidated. Your total equity in your company is a simple equation that takes into consideration three things. Let’s first take a look at the equation and then the meaning of each variable. 

      Opening Balance + Net Income = Total Equity 

      The Opening Balance, or investment equity, is simply the initial investment that you made in your business. 

      Your Net Income is broken down into two categories. First is your total net income (or loss) up to the last fiscal year or when your books were last closed. The next figure is your net income (or loss) for the current year – business since you last closed your books. Add these two figures together for your total Net Income. 

      The equity in your business is an indicator of the health of your business, but also is helpful in making business decisions or in seeking financing. If your business finances are a bit of a mystery beyond your bank balance, calculating your equity is a good place to start in understanding how your business is performing

      • Share:
      Karen Papazian

      Previous post

      News highlights ~ October 21
      November 8, 2021

      Next post

      eCommerce Payments Analysis (contact anna@virtualprof.com for access)
      November 16, 2021

      You may also like

      Protected: eCommerce Payments Analysis (contact anna@virtualprof.com for access)
      16 November, 2021

      There is no excerpt because this is a protected post.

      Basic Explanation of an S-Corporation
      14 September, 2021

      An S-Corporation sometimes causes confusion as to whether it actually qualifies as a traditionally identified business entity. A person could split hairs arguing both sides, but what is important to recognize is that a business registers with their state as their chosen …

      Understanding the P/E Ratio
      24 May, 2021

      In  simplest terms, the P/E ratio is a way to value a company by comparing  the price of its stock to its earnings. This is done by taking the price  of a share of stock and dividing by the earnings …

      Categories

      Statistics

      Statistics

      $35.00
      Accounting Ethics

      Accounting Ethics

      Free
      Blockchain Fundamentals

      Blockchain Fundamentals

      $1.00
      virtualproflogo
      Our classes incorporate traditional learning styles as well as modern hands-on experiences.
      • College Tutoring
      • QuickBooks
      • Executive Education
      • High school Tutoring

      © 2022 K Buildz LLC DBA VirtualProf.com. All rights reserved.

      • Terms of use
      • Privacy Policy
      • FAQs
      • Quick links