Equity is a residual, not a valuation. It records what owners put in plus what the business has kept, less what it has paid out and less shares bought back. It says almost nothing about what the company is worth, which is why a profitable software firm can carry negative equity.
The components matter more than the total. Equity built from retained-earnings came from operating the business; equity built from share issuance came from selling stock, and the difference shows up in return-on-equity.
Example: Northwind Tools reports $570M of equity: $180M of paid-in capital, $402M of retained earnings and a negative $12M in accumulated-other-comprehensive-income from currency translation.
Related: retained-earnings, accumulated-other-comprehensive-income, return-on-equity, liabilities, tangible-book-value