Total Equity is the value that would be returned to a company's shareholders if all the assets were liquidated and all the company's debts were paid off. It is calculated by subtracting total liabilities from total assets of the company.
While the above definition provides a quick snapshot of total equity, let's delve into a more detailed discussion. Total equity, often referred to as shareholders' equity or stockholders' equity, is a measure of a company's net value. It is the amount of money that would be left if a company sold all of its assets and paid off all of its liabilities.
Total equity includes common stock, preferred stock, paid-in capital, and retained earnings. It does not include a company's debt. Therefore, total equity can also be thought of as a company's net assets, i.e., the value of the company's assets after all debts and other obligations have been paid.
Shareholders' equity represents a company's net worth and measures its financial health. It can be a negative amount, which often indicates financial distress or bankruptcy.
For Target, total equity is calculated by subtracting its total liabilities (like accounts payable, accrued expenses, and long-term debt) from its total assets (like cash, inventory, and property).
Google's total equity is calculated by subtracting its total liabilities (like accounts payable, accrued liabilities, and long-term debt) from its total assets (like cash, accounts receivable, and property).
For Ford, total equity is calculated by subtracting its total liabilities (like accounts payable, accrued liabilities, and long-term debt) from its total assets (like cash, accounts receivable, and property).