More of this Feature • Lesson 3 Main • How to Get Copies • What is it? • Typical Balance Sheet • Current Assets • Receivables • Receivable Turns • Inventory • Inventory Turns • Inventory Example • Prepaid Expenses • Current Liabilities • Working Capital • WC Per Dollar of Sales • Negative Work. Cap • Current Ratio • Quick Ratio • Long Term Investment • Property, Plant, Equip. • Intangible Assets • Goodwill • Deferred Charges • Debt, Debt to Equity • Other Liabilities • Minority Interest • Shareholder Equity • Book Value • Com. & Pref. Shares • Cap. Surplus, Reserve • Treasury Stock • Retained Earnings • Formula & Calculations • Putting it all Together • Segment 2

Related Resources • Investing Lesson 1 • Investing Lesson 2 • Investing Lesson 3 • More Lessons

Shareholder Equity

Shareholder Equity is the net worth of a company. It represents the stockholders' claim to a business's assets after all creditors and debts have been paid. Shareholder equity is also referred to as Owner's or Stockholders' Equity. It can be calculated by taking the total assets and subtracting the total liabilities.

Shareholder equity usually comes from two places. The first is cash paid in by investors when the company sold stock; the second is retained earnings, which are the accumulated profits a business has held on to and not paid out to its shareholders as dividends. Because these are the two ways a company generally creates shareholders' equity, the balance sheet is organized to show each parts' contribution.

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