Shareholders' Equity

Shareholders' equity is the accumulated record of money put in by owners and profits retained rather than distributed, less any losses. It is a historical construct, so it says what has happened, not what the business is worth — a company can have negative equity and a large market value, or large equity and a small one. It is the denominator of return on equity, which means that buybacks, which shrink equity, mechanically raise that ratio without improving the business. In consolidated accounts, equity attributable to the parent must be separated from non-controlling interests before per-share figures are computed.