Stock holders Equity (also known as Shareholders Equity) is a balance-sheet account that consists of share capital plus retained earnings. It also represents the difference between the value of assets and liabilities. Stock holders Equity = Assets - Liabilities can be expressed by rearranging the original accounting equation, Assets = Liabilities + Stockholders Equity.
When analysing financial statements, Stock holders Equity is extremely useful. In the event of a liquidation, equity holders are paid last, followed by debt holders. This means that bondholders are paid first, followed by equity holders.

Stockholders' equity, also known as shareholders' equity or equity capital, is the residual interest in the assets of a company after deducting its liabilities. It represents the ownership interest of the shareholders in a corporation and serves as a measure of the company's net worth.

The components of stockholders' equity include common stock, preferred stock, additional paid-in capital, retained earnings, and, in some cases, treasury stock. Common and preferred stock represent the initial investments made by shareholders, while additional paid-in capital is the amount investors pay for shares above their par value. Retained earnings, on the other hand, encompass the cumulative profits or losses retained by the company rather than distributed as dividends.

Understanding stockholders' equity is crucial for assessing a company's financial health and its ability to generate returns for shareholders. It is a key element on the balance sheet and provides insights into the ownership structure and overall financial position of a corporation.