Shareholders' Equity


DEFINITION of 'Shareholders' Equity'

A firm's total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity represents the amount by which a company is financed through common and preferred shares.

Shareholders' Equity

Also known as "share capital", "net worth" or "stockholders' equity".


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BREAKING DOWN 'Shareholders' Equity'

Shareholders' equity comes from two main sources. The first and original source is the money that was originally invested in the company, along with any additional investments made thereafter. The second comes from retained earnings which the company is able to accumulate over time through its operations. In most cases, the retained earnings portion is the largest component.

  1. Equity

    Equity is the value of an asset less the value of all liabilities ...
  2. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  3. Treasury Stock (Treasury Shares)

    The portion of shares that a company keeps in their own treasury. ...
  4. Shareholder

    Any person, company or other institution that owns at least one ...
  5. Liability

    A company's legal debts or obligations that arise during the ...
  6. Common Stock

    A security that represents ownership in a corporation. Holders ...
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