Definition
Equity is the value you own after subtracting what you owe. A simple way to think about it is:
Equity = Assets − Liabilities
For example, if your home is worth $400,000 and you owe $300,000 on the mortgage, you have $100,000 in home equity.
Why It Matters
An asset's total value doesn't necessarily tell you how much of it you actually own. Equity gives you a clearer picture by accounting for the debt attached to that asset.
The same idea applies to a business. Owner's equity represents the portion of the business that belongs to its owner after the business's liabilities are subtracted from its assets.
How This Works in Quicken
For personal finances, the value of assets such as a home or vehicle and the balances of related loans contribute to your overall Net Worth.
(Quicken Business & Personal only) Business equity is reflected as Owner's Equity on the Balance Sheet Report, representing business assets minus business liabilities.