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What is the 'Shareholder Equity Ratio'
The shareholder equity ratio is a ratio used to help determine how much shareholders would receive in the event of a companywide liquidation. The ratio, expressed as a percentage, is calculated by dividing total shareholders' equity by total assets of the firm, and it represents the amount of assets on which shareholders have a residual claim. The figures used to calculate the ratio are taken from the company's balance sheet.
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BREAKING DOWN 'Shareholder Equity Ratio'
For example, let's say a company has a shareholder equity ratio of 45% and total assets of $500 million. This would mean that, in the event of liquidation, all shareholders would receive $225 million (45% * $500). The higher the ratio, the more shareholders may receive  and of course, the reverse holds true.
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