(a) Equity:
Given below is a sample balance sheet:
(a) Equity:
This is the money which the promoters bring into the business when it is launched, and subsequently by additional shareholders as and when required, who also become owners of the company to the extent of their shareholding. This is the owners’ investment in the business. An increase in the equity capital may dilute the proportionate holding of existing shareholders and therefore their participation in the profits of the company. A dilution may occur because of additional share capital being raised or a conversion of debt into equity.
In the above example, we have Equity as Rs. 100.
