How Do You Calculate a Company's Equity?

The equity of a company, or shareholders' equity, is the net difference between a company's total assets and its total liabilities. A company's equity is used in fundamental analysis to determine its net worth.

Shareholders' equity represents the net value of a company, or the amount of money left over for shareholders if all assets were liquidated and all debts repaid. 

The formula for calculating shareholders' equity is below:

$\begin{aligned} &\text{Shareholder's Equity} = \text{Total Assets} - \text{Total Liabilities} \\ \end{aligned}$​Shareholder’s Equity=Total Assets−Total Liabilities​

You can find a company's total liabilities and total assets on its balance sheet.

Below is the balance sheet for Apple Inc. (AAPL) as of March 31, 2018. 

• Total assets (in green) were $367.502 billion. 
• Total liabilities (in red) were $240.624 billion. 
• Shareholders' equity was $126.878 billion or ($367.502 - $240.624).

The value of $126.878 billion in shareholders' equity represents the amount left for shareholders if Apple liquidated all of its assets and paid off all of its liabilities.

An alternative calculation of company equity is the value of share capital and retained earnings less the value of treasury shares.

Shareholder's equity is an effective metric for determining the net worth of a company, but it should be used in tandem with analysis of all financial statements, including the balance sheet, income statement, and cash flow statement.