The formula to calculate the equity percentage (P) is:
\[ P = \left( \frac{E}{A} \right) \times 100 \]
Where:
Equity percentage is a financial metric that represents the proportion of a company’s total assets that are financed by the owner’s equity. It is an important indicator of the financial health and stability of a business. A higher equity percentage indicates that a larger portion of the company’s assets is owned outright by the owners, while a lower equity percentage suggests that the company relies more heavily on debt financing. This metric is commonly used by investors, creditors, and analysts to assess the risk and financial leverage of a business.
Let's assume the following values:
Using the formula:
\[ P = \left( \frac{500,000}{1,000,000} \right) \times 100 = 50 \]
The Equity Percentage ((P)) is 50%.
