Financial StatementsBeginner

Shareholders' Equity

Net worth, Book value

What would be left for owners if all assets were sold and all liabilities paid.

Detailed explanation

It is made up of share capital plus reserves and surplus (accumulated profits). Called 'Total equity' or 'Net worth' in Indian reports.

Formula

Equity = Total assets − Total liabilities

Example

Assets ₹900 cr − liabilities ₹500 cr = equity ₹400 cr.

Why it matters

Base for ROE and the price-to-book ratio.

Key points

  • Grows with retained profit.
  • Falls with losses and buybacks.
  • Book value per share = Equity ÷ Shares.

Related terms

Balance SheetROEP/B Ratio

More in Financial Statements

Income StatementRevenueCost of Goods SoldGross MarginEBITDAEBIT

Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.