“Peter’s Pills” è la rubrica online di Legal English curata da Federnotizie, in collaborazione con Confprofessioni e Beprof.
In questa video-lezione parliamo di “Owners Equity” ovvero “Patrimonio Netto”. Il Patrimonio Netto si calcola sottraendo tutte le passività dal valore totale degli asset dell’azienda e rappresenta un indicatore importante della salute finanziaria di un’azienda.
La video-lezione è disponibile anche su Federnotizie e sull’app Beprof, scaricabile gratuitamente da App Store e Google Play.
Transcript:
E = A – L
OE = A – L
SE = A – L
Hello!
Today we are going to try to solve a “mystery” equation. If you don’t know what “E= A – L”, “OE = A – L” or “SE = A – L” mean, then this Peter’s Pills is for you!
Let me start by telling you that E stands for Equity, while A stands for Assets and L stands for Liabilities. Does that help?
In law:
• As you many know, in law equity (quello che è equo; quello che giusto) is a set of legal principles and remedies aimed at ensuring fairness and justice (volti a garantire correttezza e giustizia), particularly when common law rules could result in injustice. It acts as a supplement and potential override to strict legal rules (deroga alle rigide norme) in inadequate or unfair (inique) situations.
• You may also remember, in law liability (responsabilità) refers to the legal responsibility or obligation for something, particularly when actions or omissions cause harm (ledono) or damage (provocano danni – N.B. damage is uncountable in English). This often requires financial compensation or other corrective actions.
But do these definitions help us to solve the equation? Sadly not.
To solve the equation we need to look at the definitions from an accounting or finance perspective.
In accounting and finance:
• As we know, an asset (attivo, bene, avere) is something valuable that someone owns or controls and expects to benefit from financially in the future.
• In accounting and finance terms a liability (passività, dare) is something a company or individual owes (deve ha verso) to others, representing a future economic burden (onere, peso).
• On the other hand, in this field equity (patrimonio, capitale) is the value remaining for the owners or shareholders after all debts are paid off (saldati) from the company’s assets. It signifies the net value of the business from the owners’ or shareholder’s perspective.
As you can see, in this context the meanings of liability and equity have changed radically.
So, the fundamental accounting equation means this:
E = A – L
means Equity equals Assets minus Liabilities
OE = A – L means Owners’ Equity equals Assets minus Liabilities
SE = A – L means Shareholders’ Equity equals Assets minus Liabilities
Context is everything here. Please remember that when people are speaking about financial statements (bilancio) or the value of a company, the meanings of equity and liability are completely different from the meanings in law.
Thank you very much and see you next time for more Peter’s Pills to improve your Legal English!