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Shareholder Equity

The shareholder equity is the value of company that is left over when a company is being liquidated (when all its assets are being sold and its liabilities repaid). The shareholder equity is therefore also called the ‘net value’ of a company. The shareholder equity can be calculated if we subtract all liabilities from all of the assets. In general, the larger the shareholder equity, the better the financial strength of the company. When the shareholder equity is negative, it indicates a risky investment and bad financial strength.

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