Stockholders' Equity

What is Stockholders' Equity?

Stockholders' Equity, also known as shareholders' equity, represents the ownership interest of shareholders in a company. It is calculated as the difference between total assets and total liabilities, reflecting the residual value available to shareholders after debts have been paid. Stockholders' equity is a key indicator of a company's financial stability and health.

Short Description: The residual interest in the assets of a company after deducting liabilities, representing ownership interest.

• Common Stock: The basic ownership unit of a corporation, carrying voting rights.
• Preferred Stock: A type of stock with fixed dividends and priority over common stock in the event of liquidation.
• Retained Earnings: Profits that a company has reinvested rather than distributed as dividends.
• Additional Paid-In Capital: Money paid by investors above the par value of stock.
• Treasury Stock: Previously issued stock that has been repurchased by the issuing company.

Stockholders' equity is central to understanding the financial structure and valuation of a business and is reported on the balance sheet under the equity section.