What is Owner’s equity?

Owner’s equity (Definition)

Owner's equity is the amount of money an owner has invested in a business, minus the amount of money the owner has taken out of the business. In essence, it is the amount of money that is left over for the owner after all liabilities have been removed from the assets. Owner's equity can be calculated by adding up all the business assets (property, plant, and equipment, inventory, retained earnings, and capital goods) and deducting all the liabilities (liabilities) from the total business assets (debts, wages, and salaries, loans, creditors).

For example, if assets are worth $700,000 and liabilities are worth $500,000, the owner's equity is $200,000.