Outsiders Equity or External Equity Definition

Definition

It means the right of outsiders on the assets of the business; it is also called external equity. The outsiders have right on the assets of the business to the extent of loan given by them only e.g.
Creditors.

Example

If a business is started by Mr. A by introducing $500,000 and $300,000 by means of loan from bank, the outsider’s equity or external equity will be $300,000 which is contributed by the bank.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.