The company’s equity value reflects the value of the company that remains with the owners after deducting all liabilities. It serves as an important key figure for investors and owners, as it provides information about the financial strength and attractiveness of the company on the market. The calculation is based on the comparison of assets and debts andTakes into account both material and intangible values.
Definition and basics of company value
When determining the company value of equity, in addition to the balance sheet equity, hidden reserves, intangible assets such as patents and future earnings prospects are often taken into account. This creates a more comprehensive picture of the company’s actual economics, which goes beyond purely accounting value. Especially in industriesWith high innovation rates or strong growth potential, this holistic approach is of great importance.
Importance of equity in the company context
The equity thus not only represents the company’s financial substance, but also has a significant influence on its scope for action and design. Equity plays a central role, especially when it comes to issuing new shares or capital increases, as it forms the basis for valuation and price formation on the capital market. In addition, the height influencesand structure of equity the creditworthiness of the company and thus its ability to absorb borrowed capital on favorable terms. Equity is also crucial for short selling that relies on falling share prices, as it directly influences the risk of investors and thus the market mechanisms. A solid equity base creates trust among investors andlenders and is therefore an essential factor for sustainable growth and stability.
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