Shareholders Equity, or SE, is the amount of a company that is financed through shareholder investments such as Common Stock and preferred shares. It is made up of money invested in the company and Retained Earnings (this is usually the largest component).
There are two means of calculating shareholders equity:
- Total Assets - Total Liabilities
- Share Capital + Retained Earnings - Treasury Shares
Shareholders Equity is part of the Balance Sheet and along with liabilities, represents what has been put into the company. Shareholders Equity and Total Liabilities must always equal Total Assets.