8 Calculating Equity
Equity is a picture of what your assets are at this time, after subtracting your liabilities. Assets are what you own in the business that is of value, such as property or inventory. However, assets are offset by liabilities, which are any debts your business owes. If you are paying off a mortgage or have borrowed any money to start or continue your business, these are liabilities.
To calculate your equity, you must first calculate your assets. Then you must subtract your liabilities.
Let’s say you own your building, which is worth $450,215, and your inventory stock at this time is worth $3,458.42. You also own furniture worth $235.61 and kitchen equipment worth $4,789.35, and you have $4,685.98 in your business account. Your total assets are $450,215 + $3,458.42 + $235.61 + $4,789.35 + $4,685.98 = $463,383.98
However, you borrowed money to start your business, and you still owe $13,235.45. You still owe $287,531.46 on your mortgage. Your total liabilities are $13,235.45 + $287,531.46 = $300,766.91
Note: It might be helpful, if a long list of figures gets you confused, to put your figures into two columns, assets and liabilities, like this:
| Assets | Liabilities |
| $450,215 | $13,235.45 |
| $3,458.42 | $287,531.46 |
| $235.61 | |
| $4,789.35 | |
| $4,685.98 |
To calculate your equity at this time, you would subtract your liabilities from your assets: $463,383.98 – $300,766.91 = $162,617.07
You have $157,931.47 in equity at this time.
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Assignment
Purpose
To practice calculating the equity of a business.
Outcomes
By completing this assignment, you will be able to…
- Understand what equity means.
- Calculate the equity of given businesses.
Instructions
To complete this assignment…
- Read the problems carefully and find the correct answers.
- Be sure to show how you set up each problem.
Tips for Success
To help in the completion of this assignment, make sure to:
- Read each problem carefully and understand what it is asking.
- Include how you set up each problem in order to get credit.
Calculating Equity Assignment
1) Sharon owns her building, which is worth $645,785.56 and her inventory stock at this time is worth $2,465.57. She owns furniture worth $564.09 and kitchen equipment worth $3,426.56. She borrowed money to start her business, and she still owes $18,462.90, and she still owes $573,897.23 on her mortgage. She has $6,902.87 in her business bank account. What is the equity of her business?
2) Lloyd borrowed money to start his business, and he still owes $7,895.03. He also owes $4,231.21 on his kitchen equipment and furniture. Lloyd’s furniture is worth $573.98 and his kitchen equipment is worth $5,908.21. He has $6,871.42 in his business bank account. His inventory stock at this time is worth $764.14. What is the equity of his business?
3) Tanisha borrowed money to start her business, and she still owes $8,726.32. She also owes $3,245.01 on her kitchen equipment. Tanisha’s kitchen equipment is worth $4,798.68. She has $7,978.34 in her business bank account. Her inventory stock at this time is worth $1,980.23. What is the equity of her business?
4) Lupe owns her building, which is worth $325,871.32 and her inventory stock at this time is worth $897.29. She owns furniture worth $564.09 and kitchen equipment worth $6,798.21. She still owes $213,890.64 on her mortgage. She has $6,492.11 in her business bank account. Her inventory stock at this time is worth $2,354.23. What is the equity of her business?
5) Donya owes $3,298.34 on his kitchen equipment and furniture. His furniture is worth $234.87 and his kitchen equipment is worth $3,901.37. He has $897.90 in his business bank account. His inventory stock at this time is worth $532.90. What is the equity of his business?
6) Nina borrowed money to start her business, and she still owes $5,689.07. She also owes $4,897.31 on her kitchen equipment and furniture. Nina’s furniture is worth $786.31 and her kitchen equipment is worth $5,012.45. She has $3,201.83 in her business bank account. Her inventory stock at this time is worth $746.54. What is the equity of her business?
7) Akeem owns his building, which is worth $562,978.43 and his inventory stock at this time is worth $3,289.45. He owns kitchen equipment worth $3,783.99. He borrowed money to start his business, and he still owes $13,572.89 and he still owes $345,908.23 on his mortgage. He has $567.90 in his business bank account. What is the equity of his business?
8) Teresa borrowed money to start her business, and she still owes $9,373.24. She also owes $967.01 on her kitchen equipment. Teresa’s kitchen equipment is worth $3,988.22. She has $11,384.05 in her business bank account. Her inventory stock at this time is worth $638.14. What is the equity of her business?
9) Malee owes $2,896.32 on his kitchen equipment and furniture. His furniture is worth $378.48 and his kitchen equipment is worth $5,285.37. He has $1,984.98 in his business bank account. His inventory stock at this time is worth $783.90. What is the equity of his business?
10) Kerubo owns her building, which is worth $701,856.92 and her inventory stock at this time is worth $1,784.53. She owns furniture worth $248.59 and kitchen equipment worth $6,285.57. She still owes $468,683.22 on her mortgage. She has $8,952.35 in her business bank account. What is the equity of her business?
11) Deniz owes $5,286.24 on his kitchen equipment and furniture. His furniture is worth $822.81 and his kitchen equipment is worth $6,298.32. He has $9,278.90 in his business bank account. His inventory stock at this time is worth $385.92. What is the equity of his business?
12) Martina borrowed money to start her business, and she still owes $8,283.68. She also owes $2,483.33 on her kitchen equipment and furniture. Nina’s furniture is worth $927.21 and her kitchen equipment is worth $6,103.37. She has $10,843.83 in her business bank account. Her inventory stock at this time is worth $385.25. What is the equity of her business?
