Public Equity and Private Equity — Microsoft Excel
In this article, we will walk you through the fantastic journey of learning public and private equity and along with that we also understand why use this in finance and how helpful it is for us, we deep dive into that so, you clearify the fundamental concept and value of this in accounting and finance.
Let’s Dive In
Public Equity and Private Equity
We are learning accounting and finance, so we must know the terms equity and private equity and the difference between them.
Public Equity
Public equity refers to the shares or ownership of a public company. Companies must be listed on the stock market. When a company goes public, it allows the public to buy ownership rights in their business. It gives a person (an individual or an organization) the right to get the small part of share of the company.
As we discussed in the Balance Sheet section, after holding the small part of share of
the company, an individual or an organization is also a shareholder of the company in the capacity of their share percentage.
The public equity industry is regulated by governmental organizations and public
companies must publish their financial information related to their stocks and assets on a regular basis for compliance purposes. It means that the finances, revenue and other details about the functioning of a company are visible to the general public. It can be short term or long-term investment for an investor in public equity.
Private Equity
Private equity is defined as the total assets or security that represent an individual
or organization’s ownership in a private company. They do not need to be listed in the stock market. The actual value of these shares depends on the shareholders’
investment percentages.
Only business owners and private investors can be shareholders in a private company. These companies target particular investors, only High Net Worth Individuals
(HNIs), venture capitals and angel brokers are allowed to invest.
Long-term investments often require patience and a long-term perspective. Unlike short-term investments that provide quick returns, long-term investments typically require a longer time horizon before generating significant returns. This is because long term investments often involve greater risks and uncertainties and may require
a longer time for market conditions and trends to develop. Examples of long-term
investments include stocks, mutual funds, real estate and retirement accounts. By being patient and holding on to these investments for the long term investors may be able to achieve significant growth and returns over time.
Conclusion
Financial statements include the cash flow statement, balance sheet and income statement. Separately, each statement provides a glimpse of a company’s financial situation. All of them combined determine the company’s financial health by
displaying whether the company can manage the incoming and outgoing funds. As accounting and financial professionals, we are well aware of financial statements and the structure and components of a balance sheet, an income statement and a cash flow statement. We are also familiar with the different terms of finance and know the difference between public and private equity.
