Online Equity Calculator
Calculate shareholders' equity and equity ratio from assets and liabilities. Essential for understanding business financial position and balance sheet analysis.
All company assets
All company debts and obligations
What is Shareholders' Equity?
Shareholders' equity (also called owner's equity or net worth) represents the value that would be returned to shareholders if all assets were liquidated and all debts were paid off. It's calculated as Assets minus Liabilities.
Equity is a key indicator of a company's financial health and represents the owners' stake in the business. It includes retained earnings, paid-in capital, and other equity components.
How to Use the Equity Calculator
- Enter total assets: Input the total value of all company assets (cash, property, equipment, inventory, etc.).
- Enter total liabilities: Input all company debts and obligations (loans, accounts payable, mortgages, etc.).
- Calculate: Click "Calculate Equity" to see shareholders' equity and equity ratio.
Understanding Equity
Shareholders' Equity
Equity = Assets - Liabilities. This represents the net worth of the company and what shareholders own after all debts are paid. Positive equity indicates the company has more assets than liabilities.
Equity Ratio
Equity Ratio = (Equity / Assets) × 100. This shows what percentage of assets is financed by equity rather than debt. Higher ratios indicate less financial risk.
Why It Matters
Equity is crucial for assessing financial stability, creditworthiness, and investment value. Companies with strong equity positions are generally more financially stable.
Frequently Asked Questions
What's included in assets?
Assets include cash, accounts receivable, inventory, property, equipment, investments, and any other items of value owned by the company.
What's included in liabilities?
Liabilities include loans, accounts payable, mortgages, bonds, accrued expenses, and any other debts or obligations the company owes.
What's a good equity ratio?
A good equity ratio varies by industry, but generally 30-50% is considered healthy. Higher ratios indicate less reliance on debt financing and lower financial risk.
Can equity be negative?
Yes, if liabilities exceed assets, equity will be negative. This indicates the company owes more than it owns, which is a sign of financial distress.
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