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The stockholders' equity can be calculated from the balance sheet by subtracting a company's liabilities from its total assets. Although stock splits and stock dividends affect the way shares are allocated and the company share price, stock dividends do not affect stockholder equity.
Shareholders' Equity = Total Assets ? Total Liabilities Take the sum of all assets in the balance sheet and deduct the value of all liabilities. Total assets are the total of current assets, such as marketable securities and prepayments, and long-term assets, such as machinery and fixtures.
Stockholders' equity refers to the assets remaining in a business once all liabilities have been settled. This figure is calculated by subtracting total liabilities from total assets; alternatively, it can be calculated by taking the sum of share capital and retained earnings, less treasury stock.
Stockholders' equity can be calculated by subtracting the total liabilities of a business from total assets or as the sum of share capital and retained earnings minus treasury shares.
Shareholders' Equity = Total Assets ? Total Liabilities The above formula is known as the basic accounting equation, and it is relatively easy to use.