Shareholder Equity

Shareholder equity, also known as stockholders’ equity, represents the ownership interest held by shareholders in a company. It is the residual value of the company’s assets after all liabilities have been deducted. Shareholder equity is an important measure of a company's financial health and can be found on the balance sheet. It includes common stock, preferred stock, retained earnings, and any other accumulated earnings.

Example

A company’s balance sheet shows total assets of $500 million and total liabilities of $300 million, resulting in shareholder equity of $200 million.