Saturday, October 22, 2005

What is Shareholders' Equity?

Each day for the next month or so I will post information to help you understand what a company's balance sheet is, what are income statements, and what are cash flow statements. This information should help you become a better investor and hopefully make you a lot of money.

Balance Sheet
- Provides an overview of a company's financial health

Assets - Resources that have the potential to provide future economic benefits for a company

Liabilities - Creditors' claims on assets of a company

Shareholders' Equity - Investors' claim on all assets that are not owed to creditors
  • Shareholders' Equity = Assets - Liabilities
  • Ex: $30,000 (S. Equity) = $40,000 (assets) - $10,000 (liabilities)


Post a Comment

<< Home