Stockholders’ Equity

Stockholders’ equity is the owners’ share of a corporation.  It is the value of the corporation’s assets less the value of its liabilities.

Corporations issue stock certificates, which represent equal shares of ownership.  For example, if ten people hold one share of stock each, then they each own 1/10 of the corporation.  Suppose the corporation issues five shares of stock to another person. Then this person would own 5/15 of the corporation (the stockholder owns 5 shares and stockholders hold a total of 15 shares of stock).  Large corporations may have hundreds of millions of shares of stock outstanding.

Google has approximately 325 million shares of stock outstanding.  If you were to buy one share of Google stock today, you would then own 1/325 millionth of the company.

[Image: US Mint]

About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

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