shareholder's equity

Shareholder’s equity, also called stockholder’s equity, is total assets less total liabilities. It’s the net worth—the dollar value of what shareholders own after satisfying all liabilities. On the firm’s balance sheet, shareholder’s equity is broken down into common stock, additional paid-in capital (which accounts for the difference between the common stock’s offer price and par value) and retained earnings. It can also include treasury stock (the amount paid for shares that a company has repurchased) and preferred stock. Shareholder’s equity divided by shares outstanding is book value per share; this amount is the value that shareholders would theoretically receive in the event of liquidation.