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How to Calculate Stockholders Equity Capital

Original post by Tiffany Garden of Demand Media

Stockholder's equity refers to both the initial capital investment made in a company and the retained earnings made by the same company. This figure is reported on a company's balance sheet or statement of financial position. Stockholder equity can be a negative or positive number, depending on whether the total liabilities for the business exceed the assets. To calculate stockholder equity, you first need some key information, including the all of the company's assets and liabilities.

Step 1

Create a list of the business assets. You need to include all of the company's assets, from cash on hand to real estate that the business owns. Add these numbers together to get the total asset value figure.

Step 2

Add the business liabilities together. Examples of common business liabilities include business loans, supply expenses and payables. This figure is the total business liability.

Step 3

Subtract the total business liability from the business assets. The figure created by this equation is the stockholder's equity. This figure is split between each stockholder and is sometimes known as the book value of the company.

                   

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About the Author

Tiffany Garden has been a freelance writer since 2002, working in the commercial copywriting field. She has been published in a number of technical and gaming magazines, as well as on numerous websites. She also runs her own websites on a number of subjects, runs a handcrafted jewelry business and is a CompTIA A+ Certified computer technician.


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