# Equity

Equity is a broad based term used in business. It has several definitions. The primary definition is associated with the equity section of the balance sheet. It refers to the financial position of the owners of a business.

## High Price to Book Ratios – Proper Interpretation and Evaluation

With stock investing, one of the valuation ratios used is the price to book ratio.  It identifies the spread between book value and market value for a share of stock.  As the spread increases the ratio increases.  A good example is Coca-Cola. Its price to book ratio hovers in the 11 range.  Coca-Cola is a Dow Jones Industrial top 30 stock.

## Bookkeeping – Controls in Accounting (Lesson 95)

Just as manufacturing uses controls to ensure quality of product, controls are used in accounting to generate accurate information, maintain security over assets and comply with Generally Accepted Accounting Standards. The company implements various controls to assure accurate and timely information.

## Return on Equity

Another performance ratio used in business is return on equity. It is similar to return on assets except return on equity uses one section of the bottom half of the balance sheet.

## Debt Ratio

Every business buys on account whether it is a traditional vendor account like that found in retail or simply using a credit card. A third party provides credit which creates debt for the business. The debt ratio reflects the percentage of assets covered by debt.

## Debt or Equity in Small Business – Fundamentals

Small business books and manuals explain the formula used to determine whether additional debt increases the return for investors commonly known as return on investment (ROI).

## Bookkeeping – Various Terms (Lesson 26)

In the previous 25 lessons I covered a lot of different terms and this lesson is merely a summary of the various terms a bookkeeper encounters.

## Bookkeeping – The Accounting Equation (Lesson 24)

The accounting equation is a simple formula used frequently in business. The formula is: Assets = Liabilities plus Equity OR Equity = Assets minus Liabilities.

## Treasury Stock – Fundamentals of Stock

Those corporations doing well and flush with cash sometimes buy back stock from their investors. Once purchased back by the company the stock is called treasury stock. However, in small business, buying back stock can significantly alter the entire corporate control ownership and impact the long term outcome and direction of the company.

## Penny Stocks- Introduction

Those small publicly traded businesses with share prices of less than \$5 and capitalization of less than \$50 million are referred to as penny stocks. Penny stocks may trade on any of the major stock exchanges. For investors the risk is generally greater and the chance of instant success is remote at best. To counter this relatively volatile environment an investor can participate for a relatively low investment dollar amount.

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