what is return on equity
To determine equity, assess the value of assets minus liabilities, representing ownership stake. Start by listing all assets, including cash, investments, and property, then subtract debts like loans and mortgages. Equity reflects the portion of assets owned outright, contributing to net worth. For businesses, equity encompasses shareholder ownership after subtracting liabilities from assets. Analyze financial statements, such as balance sheets, to calculate equity. It's vital for individuals and businesses alike to understand equity as it indicates financial health, potential returns, and ownership rights. Regularly review equity to gauge progress, make informed decisions, and ensure financial stability and growth.