The concept that smaller sized companies are riskier and, therefore, should have a higher cost of equity is known as the size premium.
What is Equity?
- Equity, also known as shareholders' equity or owners' equity for privately held businesses, is the sum of money that would remain in the hands of a company's shareholders in the event that all of its assets were sold off and its liabilities were fully settled.
- It is the worth of company sales less any obligations owing by the company that were not transferred with the sale in the case of an acquisition.
One of the most frequently used pieces of information by analysts to evaluate a company's financial health is equity, which can be found on a company's balance sheet.
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