companydata.dkEquity (egenkapital)
Equity (egenkapital) is the difference between a company's assets and its liabilities — the owners' share of the company. It typically consists of share capital, retained earnings, and any reserves.
Equity grows when the company earns money and retains the profit, and shrinks with losses or dividend payments. It acts as a buffer: the larger the equity relative to the balance sheet total (solvency ratio), the more resilient the company is to bad years.
Negative equity
If equity is negative, the company owes more than its assets are booked at. This is also described as the capital being lost, and under the Danish Companies Act management must react if more than half the share capital is lost. Negative equity is one of the clearest warning signs in a set of financials.
Related terms
Solvency ratio (soliditetsgrad)
The solvency ratio (soliditetsgrad) shows how large a share of a company's assets is financed with equity. It is calculated as equity divided by the balance sheet total, multiplied by 100.
Balance sheet total (balancesum)
The balance sheet total (balancesum) is the sum of all the company's assets — and equally the sum of equity and liabilities, since the balance sheet balances by definition. It is used as a measure of company size.
Share capital (selskabskapital)
Share capital (selskabskapital) is the capital the owners have subscribed and contributed to a limited company. The minimum is DKK 20,000 for an ApS and DKK 400,000 for an A/S. The capital is public in CVR and can later be increased or reduced.
Net result (årets resultat)
The net result (årets resultat) is the bottom line of the financial statements: the company's total profit or loss for the fiscal year after all costs, financial items, and tax have been deducted.