The total liabilities and stockholders' equity of a company represents the total sources of funds a company has used to finance its assets. It's calculated by summing up a company's liabilities (what it owes) and stockholders' equity (residual ownership interest in the company).
For an in-depth understanding, we need to break down the two main components of this concept: liabilities and stockholders' equity. Liabilities refer to financial obligations or debts a company owes to outside parties. These might include accounts payable, salaries payable, interest payable, and long-term debts.
On the other hand, stockholders' equity represents the residual ownership interest in the company and is derived by deducting total liabilities from total assets. It typically includes common stock, retained earnings, and other comprehensive income.
The sum of total liabilities and stockholders' equity provides a complete picture of a company's capital structure and is equal to the company's total assets, as per the balance sheet equation: Assets = Liabilities + Stockholders' Equity.
For Amazon, total liabilities and stockholders' equity is calculated by adding liabilities (like accounts payable, accrued expenses, and long-term debt) and stockholders' equity (consisting of common stock, retained earnings, and accumulated other comprehensive income).
Apple's total liabilities and stockholders' equity is computed by adding its liabilities (such as accounts payable, commercial paper, and term debt) and stockholders' equity (including common stock, retained earnings, and accumulated other comprehensive income).
For Tesla, total liabilities and stockholders' equity is derived by adding its liabilities (like accounts payable, accrued liabilities, and convertible senior notes) and stockholders' equity (comprising of common stock, additional paid-in capital, and accumulated deficit).