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Shareholders' equity, also known as owner's equity in private companies, is what is left of the company's assets after all of its liabilities are netted out. It consists of:
i.) Common stock: The par value of shares issued to shareholders.
ii.) Earnings retained: The profits that have been withheld from the realization as dividends.
iii.) Paid-in capital in excess: Funds derived from issuing stock above par.
iv.) Treasury stock: The value of a company's repurchased shares.
The equity section gives insight into the financial strength of a company and depicts returns it can provide for its owners or shareholders.
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