Components of a Balance Sheet

Shareholder Equity

Shareholder equity is the money attributable to a company's owners or shareholders. It is also known as
net assets since it is equal to a company's total assets less its liabilities or debt owed to non-
shareholders.

Retained earnings are the net earnings that a corporation either reinvests or uses to pay down debt. The
leftover funds are paid to shareholders as dividends.

A company's repurchased shares is known as treasury stock. It can be sold at a later period to raise cash,
or it might be held in reserve to fend against a hostile takeover.

Some businesses issue preferred stock, which is mentioned separately from ordinary stock in this
section. Preferred stock (and, in certain situations, ordinary stock) is allocated an arbitrary par value that
has no influence on the market value of the shares. The par value multiplied by the number of shares
issued yields the common stock and preferred stock accounts.