Equity (or Shareholders’ Equity)

Shareholders’ equity is the capital that incurs the risk of the business. This type of financial resource forms the cornerstone of the entire financial system. Its importance is such that shareholders providing it are granted decision-making powers and control over the business in various different ways. Shareholders’ equity is equal to the sum of capital increases by shareholders and annual net income for past years not distributed in the form of dividends plus the original share capital.