Equity . . . 

is ownership. It is what companies sell to investors to get them to fund a company and what entrepreneurs retain to realize the value of what they have created. Equity represents the value of a company as a going concern. It is the most permanent form of investment in a company. Equity does not require repayment and so does not deplete company cash, as debt repayments do.

Usually, equity takes the form of stock ownership and is different from rights a person may have under a note, debenture, or other debt instrument. Convertible debentures have characteristics of both debt and equity. They are treated as debt until the holder elects to convert them. Then they lose their debt characteristics and become equity.

Equity has an element of magic. Some of the most outrageous, unlikely, seemingly ridiculous business ventures have been undertaken with the object of creating equity. The pursuit of equity is as deeply a part of the American entrepreneur as is the pursuit of happiness. See: Cash Flow, Common Stock, Convertible Securities, Debentures, Equity Penalties, Preferred Stock.