What is the term for the total cash remaining after all debts are settled?

The total cash remaining after all debts are settled is referred to as equity. This term encompasses the ownership value in an asset, essentially representing the difference between what an entity owns and what it owes. In a business context, equity is the amount of funds that have been invested in or earned by the company, after deducting any liabilities.

Equity not only reflects the financial health and net worth of a business or individual but also indicates the residual interest after all external claims have been fulfilled. This is critical for stakeholders, as it shows how much of their investment is genuinely their own versus how much is financed through debt. Understanding equity is fundamental for evaluating a business's value and potential profitability.