Company equity, or shareholders' equity, is the net difference between a company's total assets and total liabilities. A company's equity is used in fundamental analysis to determine its net worth.

Shareholder equity represents the net value of a company, or the amount of money left over for shareholders if all assets were liquidated and all debts repaid. 

How to Calculate Shareholder Equity

A company's total liabilities and total assets are listed on the balance sheet. The formula for calculating shareholders' equity is below:

Example of Shareholders' Equity 

Below is the balance sheet for Apple Incorporated (AAPL) as of May 1, 2018.  

  • Total assets (in green) were $367,502 billion. 
  • Total liabilities (in red) were $240,624 billion. 
  • Shareholders' equity was $126,878 billion or ( $367,502 - $240,624).

The value of $126,878 billion in shareholder equity represents the amount left for shareholders if Apple liquidated all of its assets and paid off all of its liabilities.

The shareholder's equity section of the balance sheet can also be used to calculate company equity. An alternative calculation of company equity is the value of share capital and retained earnings less the value of treasury shares.

Shareholder's equity is an effective metric for determining the net worth of a company but should be used in tandem with analysis of all the financial statements including the balance sheet, income statement, and cash flow statement.

  1. How do the income statement and balance sheet differ?

    The balance sheet shows a company’s total value while the income statement shows whether a company is generating a profit ... Read Answer >>
  2. What is the difference between market capitalization and equity?

    Understand the difference between market capitalization and equity, two primary measurements used to evaluate the worth of ... Read Answer >>
  3. How are the three major financial statements related to each other?

    Learn why investors analyze a company's financial statements, and how the income statement, balance sheet and cash flow statement ... Read Answer >>
  4. Which transactions affect retained earnings?

    Retained earnings is the cumulative total of earnings or net income that have yet to be paid to shareholders. Retained earnings ... Read Answer >>
  5. How do the P&L statement and balance sheet differ?

    There are stark differences between the profit and loss statement and the balance sheet. And investors must know how to interpret ... Read Answer >>
  6. Why do shareholders need financial statements?

    Discover the importance of a company's financial statements for stock shareholders in evaluating their equity investment ... Read Answer >>
Related Articles
  1. Investing

    Reading the Balance Sheet

    Learn about the components of a company balance sheet - aka the statement of financial position - and how it relates to other financial statements.
  2. Investing

    How To Read Apple's Balance Sheet

    Here is how to find, read and analyze a balance sheet from Apple.
  3. Investing

    Balance Sheet: Analyzing Owners' Equity

    Analyzing owners’ equity is an important analytics tool, but it should be done in the context of other tools such as analyzing the assets and liabilities on the balance sheet.
  4. Investing

    Equity Multiplier

    The equity multiplier is a straightforward ratio used to measure a company’s financial leverage. The ratio is calculated by dividing total assets by total equity.
  5. Financial Advisor

    Analyzing Owners' Equity

    Analyzing owners’ equity is an important exercise for any shareholder.
  6. Investing

    Evaluating a Company's Capital Structure

    Learn to use the composition of debt and equity to evaluate balance sheet strength.
  7. Investing

    Grasp the Accounting of Private Equity Funds

    Read about private equity accounting and how it is different than that of other investment vehicles. The nature of private equity makes a difference.
  8. Investing

    Lowe's Stock: Capital Structure Analysis (LOW)

    Examine Lowe's Companies' equity capitalization, debt capitalization and enterprise value to analyze trends in the retailer's capital structure.
  1. Accounting Equation

    The accounting equation, also known as the balance sheet equation, ...
  2. Equity Multiplier

    The ratio of a company’s total assets to its stockholders’ equity. ...
  3. Cost Of Equity

    The cost of equity is the rate of return required on an investment ...
  4. Official Committee Of Equity Security Holders

    An official committee of equity security holders represents shareholders ...
  5. Financial Statements

    Financial statements are written records that convey the financial ...
  6. Shareholders' Agreement

    A shareholders' agreement is an arrangement among a company's ...
Trading Center