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Shareholders' equity may be calculated by subtracting its total liabilities from its total assets?both of which are itemized on a company's balance sheet. Total assets can be categorized as either current or non-current assets.
Summary. Shareholders' equity is the shareholders' claim on assets after all debts owed are paid up. It is calculated by taking the total assets minus total liabilities. Shareholders' equity determines the returns generated by a business compared to the total amount invested in the company.
By rearranging the original accounting equation, Assets = Liabilities + Stockholders Equity, it can also be expressed as Stockholders Equity = Assets ? Liabilities. Stockholders Equity provides highly useful information when analyzing financial statements.
The equation for the balance sheet is Assets = Liabilities + Stockholders' Equity. The stockholders' equity section of the balance sheet reports the worth of the stockholders. It has two subsections: Paid-in capital (from stockholder investments) and Retained earnings (profits generated by the corporation.)
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.