Equity is non-debt funds invested in a business entity. It is a measure of the shareholders’ stake in a business enterprise after deduction of all liabilities. Equity may take several forms such as ordinary equity, preference share or a derivative (such as options, warrants, futures, forwards, convertible bonds, and swaps). In the statement of financial position, total equity is made up of invested capital plus retained earnings. In business valuation analysis, the value of equity is computed as: Enterprise value less the market value of debt.