Glossary Terms

Owner’s Equity

Owner’s equity is the business capital hypothetically available for distribution to shareholders.

Owner’s equity is the business capital hypothetically available for distribution to shareholders. It is figured by subtracting the total liabilities from the total assets of the company.

Owner’s equity is comprised of the owner’s investment in the company, minus her withdrawals from the business, plus the net income since the business began. It is not the same as the market value of the business because of inflation adjustment and depreciation of physical assets.