Fill in the blank: If your company has more assets than liabilities, the remaining balance is your _____.

revenue

cashflow

profit margin

equity


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Explanation: The correct answer is equity. Equity represents the residual interest in the assets of a company after deducting its liabilities. When a company has more assets than liabilities, it means that the total value of its resources exceeds its financial obligations, leaving a surplus. This surplus, which belongs to the owners of the company, is known as equity. Equity reflects the ownership interest of shareholders in the company’s assets and represents the portion of the company’s value attributable to its owners’ contributions and retained earnings. It serves as a measure of the company’s net worth and represents the owners’ stake in the company’s assets. Equity can be further categorized into various components, such as common stock, additional paid-in capital, retained earnings, and accumulated other comprehensive income. By calculating equity, investors, creditors, and other stakeholders can assess the financial health and value of the company and understand the extent of ownership rights held by shareholders. Therefore, when a company has more assets than liabilities, the remaining balance is its equity, making it the correct answer.

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