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Definition

Total Equity refers to the net assets owned by shareholders.

Total Equity = Preferred Stock + Common Stock + Capital Surplus + Retained Earnings

Total Equity and Total Liabilities are the two components for Total Assets:

Total Assets
= Total Shareholder’s Equity + Total Liability
= Total Current Assets + Total Long Term Assets


Total equity is used to calculate book value per share:

Book Value per Share = (Total Equity-Preferred Stocks)/ Total Shares Outstanding.

The ratio of a company’s debt over equity can be used to measure how leveraged this company is:

Debt-to-Equity = (Long Term Debt + Current Portion of Long Term Debt)/Total Equity.

Formula

Total Equity = Total Assets - Total Liabilities

Related Terms

Total Liabilities, Total Assets

Financial Dictionary

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