If you subtract equity from assets, what do you calculate?

When you subtract equity from assets, you calculate liabilities. This relationship is based on the fundamental accounting equation: Assets = Liabilities + Equity. By rearranging this equation, you can express liabilities as the difference between assets and equity.

In practical terms, if a business or an entity has a certain amount of assets, and you want to understand how much of that is financed through debt rather than ownership claims (equity), you would subtract the equity value from the total assets. The resulting figure would be the total liabilities, which represent the obligations the entity has to creditors. This understanding is crucial for assessing the financial health and stability of an organization, especially for those involved in financial management or administration within a healthcare context like assisted living facilities.