Financial Statements
Shareholders’ Equity
The value left for owners after liabilities are subtracted from assets.
Also called: stockholders’ equity, book equity
What it means
Shareholders’ equity represents the residual value of the business after total liabilities are subtracted from total assets. It includes items such as common stock, additional paid-in capital, retained earnings, and certain other accumulated balances.
Why it matters
It helps users understand the ownership value recorded on the balance sheet, though that value is not always the same as market value.