The residual interest in the assets of a company after deducting liabilities, representing the owner's or shareholders' claim on the business.
Owner's Equity refers to the residual interest in a small business's assets after deducting liabilities. It represents the ownership value or stake that the business owner or owners have in their company. Owner's Equity is calculated by subtracting total liabilities from the company's total assets and reflects the net worth of the business. It includes investments made by the owner(s), retained earnings, and any accumulated profits or losses. Understanding the owner's equity is essential for small business owners as it helps assess the financial health and value of their business and serves as a measure of the business's long-term sustainability and growth potential.