Definition for : 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. Dividends are a way of apportioning Earnings voted on the ordinary general meeting of Shareholders once the company's accounts have been approved. Shareholders' Equity is not contractually remunerated, does not have a repayment date, and in case of the Liquidation of the company is paid off only after the debts were paid off. 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.

(See Chapters Chapter 2 Cash Flows, Chapter 3 Earnings, Chapter 4 Capital employed and invested capital, and Chapter 2 Cash FlowsChapter 3 Earnings of the Vernimmen)

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