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The shareholders’ equity (SE) of a company is the total value of all assets owned by the company, minus all liabilities. This is the same as the amount that would be paid out to shareholders if the company were closed and liquidated, after all debts were paid.
Shareholders’ equity can be computed from a company’s balance sheet. Assets include cash, real estate, marketable securities, furniture or anything that can be sold. As an example, consider the company “Simple” which only owns $100,000 worth of computer equipment and a $300,000 office. If Simple owes $200,000 on the equipment and office loans, Simple’s shareholder equity is $100,000 + $300,000 - $200,000 = $200,000.
Related Links
Investopedia’s article on shareholders' equity
Definition of shareholders' equity from Study.com
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