Shareholders Equity (SE) is generally used for assessing a company’s net worth or the total amount to be returned to its shareholders if the company is liquidated after all its outstanding liabilities are paid off. As the shareholders are the ‘owners’, they can claim the amount or assets of a company after all the debts are settled. Shareholder Equity is thus equal to the value of the company’s assets after deducting its total liabilities.
Shareholders Equity Explained
Shareholders Equity is used in certain financial ratios which help to evaluate the company’s performance, financial strength and its profitability. It also assists analysts and investors for taking an informed investment decision. A company’s shareholder equity can be calculated using data from its balance sheet. Calculation of Shareholder Equity Shareholders Equity = Total Assets – Total Liabilities