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Equity in business refers to the ownership interest that shareholders hold in a company. It represents the residual interest in assets after deducting liabilities and reflects the shareholders' claim on the company's net assets. Equity is a vital component of a firm's capital structure and can be in the form of common stock or preferred stock. It provides a basis for calculating the company's net worth and determines the distribution of profits among shareholders. Equity also plays a crucial role in attracting investors and influencing a company's financial health and stability.