What is the difference between stocks and equities?

Stocks and equities are two terms often used interchangeably. However, there is a thin line of difference between them. Here is a detail about the pointers that distinguish between the two:

1. Equity is the value of the business entity after paying off the liabilities and is considered the net worth. It can also be referred to as the ownership of company shares.

2. When these shares are traded on the stock exchange, it is referred to as company stocks. It is the proportion of equity provided to the general public to raise capital. For equity shares to be considered stock, it has to be listed in any of the recognized stock exchanges in India.

3. As equities are not traded in the public stock exchange, they do not fluctuate in value.

4. The price of the stocks keep changing based on the demand and supply on the stock exchange. It will depend on the market volatility, political and economic factors as well.

5. The value of the equity in the business is clearly stated in the company's financial statements, especially the Balance Sheet. However, as the stock prices keep fluctuating, it is generally not detailed in the financials.

6. When considering the company for a merger or an acquisition, the stock price of the shares is considered important compared to the equity value.

While planning to invest in stocks, it is important to consider the value of equity, the stock price trend and the company financials with adequate research for making good profits.