Eigenkapital (EN)

Definition

Equity represents the portion of assets that remains to the owners of the company after all liabilities have been settled. It consists of the paid-in capital, reserves, and the annual surplus or deficit. Equity is an important indicator of a company's financial strength and independence and is shown on the liabilities side of the balance sheet.

Structure of Equity

flowchart TD     A[Equity] --> B[Total profit]     A --> C[Owner contributions]     A --> D[Reserves]          B --> E[Annual surplus/deficit]     B --> F[Tax corrections]          D --> G[statutory reserves]     D --> H[statutory reserves]     D --> I[other reserves] 

In Context

• Typically used together with debt capital to calculate the equity ratio
• Related to: Balance sheet, Liabilities, Reserves, Annual surplus
• Example use: Equity ratio = Equity / Total capital × 100%