This figure represents the book value of shareholders’ investment in the company for the time period listed. Total equity is also called shareholders' equity, net worth, or book value. Total equity, as with other balance-sheet items, is shown in millions of dollars ($M) and is current as of the last day of the quarter.
Benefit
Total equity is one of the two main sources of long-term capital for a company, the other being long-term debt. Because total equity is the difference between a company’s total assets and its total liabilities, it represents (very roughly) the break-up value of the company. If a company were to sell off its assets and use them to pay off all of its liabilities, total equity would be about what it would end up with.
Origin
This information is found in the shareholders’ equity area of the company’s most-recent quarterly or annual balance sheet. This information is updated weekly.
For the Pros
Many investors use the price/book ratio—the ratio of a company share price to its total equity per share—as a way to value the stock of a company. If the share price is less than total equity per share, the company is selling for less than its break-up value.
Use the following formula as a more up-to-date financial leverage ratio:
Total Assets Quarter 1 / Total Equity Quarter 1