Define: Quity
Quity means equity: the difference between a company's total assets and its liabilities, calculated under Generally Accepted Accounting Principles (GAAP). In plain terms, it's the value left for the owners once everything the business owes has been subtracted from everything it owns. The word is a common misspelling of equity, so if you searched for the quity meaning, the definition you're after is the same one used in contracts and accounting.
Legal accuracy standard set & glossary spot-checked by Imad Mohammed Nazar , Skadden-trained M&A lawyer, Legal Engineer at GenieAI
In practice, quity is the term parties often use as shorthand for equity when a contract needs to reference the net worth of a business. It shows up wherever a figure has to reflect what the owners actually hold after debts are settled. Because the number depends on how assets and liabilities are recognized, contracts usually tie the calculation to a named accounting standard so both sides read the figure the same way. A covenant that references quity is only as reliable as the method used to compute it. It's worth separating this accounting sense of equity from the legal doctrine of equity, the body of equitable principles courts apply to reach a fair result. Both share the same root word, but a contract that says quity almost always means the net worth figure, not equitable relief.
Relevant Circumstances
- When equity is being calculated as assets minus liabilities under GAAP.
- If financial covenants reference a specific equity threshold.
- Where accounting standards drive the figure used in a contract.
- When an investor, lender, or buyer needs to assess the net worth attributable to a company's owners.
- In share purchase, loan, and shareholder agreements where the right amount of equity has to be defined precisely.
- When you need to check the meaning of an unfamiliar or misspelled term before signing.
Relevant Sectors
Take a simple example. If a company holds $500,000 in total assets and owes $300,000 in liabilities, its quity is $200,000. That $200,000 is the amount attributable to the owners. If the business later takes on $50,000 more debt without adding assets, the figure falls to $150,000, which is why lenders and investors watch it closely. When a contract sets a minimum quity threshold, it's fixing a floor for that net figure so a counterparty can't erode value beyond an agreed point.