Equity (Equity Capital)
In short: Equity capital , or simply equity, corresponds to the funds that could be returned to a company's shareholders if all of the company's assets were…
Equity capital, or simply equity, corresponds to the funds that could be returned to a company's shareholders if all of the company's assets were liquidated and all of its debts were paid. In accounting terms, equity equals total assets minus total liabilities.
Why it matters
Equity shows how much of a business belongs to its owners rather than to its lenders, which is why investors use it in measures such as the debt-to-equity ratio and return on equity. The term also describes money a company raises by selling ownership shares, as opposed to borrowing it as debt. In crypto, it helps to keep ownership and tokens apart: holding a project's token usually gives no claim on the company's assets unless the token's terms say otherwise. When a company holds crypto on its balance sheet, changes in the value of those holdings can also affect its reported equity.
Example
A company owns assets worth 500 units of currency, including cash, equipment, and some bitcoin, and owes 300 units to banks and suppliers. Its equity is 200 units: the amount that would, in theory, be left for shareholders after selling everything and repaying every debt. If the bitcoin it holds loses 50 units of value while its debts stay the same, equity drops to 150 units.