Shareholder's Equity

The video explains shareholders equity as a key component of the balance sheet, detailing its formation through initial contributions, retained earnings, additional capital, and equity compensation. Shareholders equity is the sum of initial capital, retained earnings, and any additional contributions, including equity given as compensation. It highlights how profits retained in the company and additional stock purchases contribute to the equity value.

What is shareholders equity in its simplest form?

What does the balance sheet accounting equation state?

How do shareholders initially contribute to a company?

What happens to profits that are not distributed to shareholders?

In what ways can shareholders add additional capital to the company?