Equity and Asset

Discussion in 'English Only' started by puhoo, Jan 11, 2007.

  1. puhoo New Member

    Chinese China

    First post, please who native tells me the differences between these two words in financial context? Thanks a lot
  2. JamesM

    JamesM à la Mod (English Only)

    Welcome, puhoo, to the forum!

    As I see it, equity is the difference in value of a property and any debt related to that property. The property could be real estate, a manufacturing facility, a stock/bond/commodity, anything of value.

    Equity is one type of asset. Other assets are fixed assets (equipment), cash, accounts receivable, even good will. An asset is usually something that has a cash value of some kind. In other words, you could convert it to cash at some point by having someone pay you for it.

    I am not an accountant, but I have worked with many financial systems over the years as a contract programmer. I think these are reasonable definitions in laymen's terms. An accountant or financial expert could give you a much more precise definition. I imagine that you're looking for a simpler explanation, though, since you could look both terms up in any dictionary.
  3. puhoo New Member

    Chinese China
    Thanks very much James for the answer, you save me from the ambiguity.
  4. cjdecker New Member

    english usa
    Good Morning,
    An asset is anything you own. A girl's figure is one of her assets. you might own a house as opposed to renting one. There is no real equity in a girl's figure but in regards to the house, you might have bought a $100,000 house this morning with 100% financing from the bank. You own the house but owe the bank for the entire price leaving no equity for you. Once you pay the bank off, you have 100% equity. Now say you bought that same house at auction for $60,000 and it appraises for $100,000. You have instant equity of $40,000. Equity is how much of the total value of the asset that you own. It can be expressed as a dollar figure or a percent. You might also say, "I have equity in...a cotton farm (and not state the %) This may be because you are part of a real estate group and the group owns the farm. So you own some vague % of the farm. Aslo you gain no ownership or equity when renting.
    I hope that helps.
  5. puhoo New Member

    Chinese China
    Merci à tous, the examples clarify the discrepencies.

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