The portion of the balance sheet that represents the capital received from investors in exchange for stock (paid-in capital), donated capital and retained earnings. Stockholders' equity represents the equity stake currently held on the books by a firm's equity investors.
It is calculated either as a firm's total assets minus its total liabilities, or as share capital plus retained earnings minus treasury shares:
Also known as "shareholders' equity".
Investopedia Says:
Stockholders' equity is often referred to as the book value of the company, and it comes from two main sources. The first and original source is the money that was originally invested in the company, along with any additional investments made thereafter. The second comes from retained earnings that the company is able to accumulate over time through its operations. In most cases, especially when dealing with older companies that have been in business for many years, the retained earnings portion is the largest component.
Related Links:
Learn about the components of the statement of financial position and how they relate to each other. Reading The Balance Sheet
We delve into common stock owner's privileges and how to be vigilant in monitoring a company. Knowing Your Rights As A Shareholder
Understanding this will help you understand the nature of the market and the meaning of ownership. Why Do Companies Care About Their Stock Prices?
If you're new to the stock market and want the basics, this is the tutorial for you! Stock Basics Tutorial
