Stockholders' Equity
The residual interest in a company's assets after deducting all liabilities; what shareholders theoretically own.
What is Stockholders' Equity?
Stockholders' equity, also called shareholders' equity or book value, represents the net worth of a company from an accounting perspective — total assets minus total liabilities. It is composed of contributed capital (common stock and additional paid-in capital), retained earnings, accumulated other comprehensive income (AOCI), and treasury stock (a deduction for shares repurchased). Because equity reflects historical cost accounting rather than market values, it often diverges sharply from a company's market capitalization. The Price-to-Book ratio compares market cap to stockholders' equity, while Return on Equity (ROE) measures how efficiently management generates profits from this base.
Example
Johnson & Johnson reported stockholders' equity of approximately $71 billion as of FY2024, consisting of paid-in capital, retained earnings, and accumulated other comprehensive income — representing the accounting net worth of the company after all debt and liabilities.