Shareholder Equity is an entry on the Balance Sheet representing the amount that shareholders could expect to be returned to them in the event that all assets were sold and all company debts were paid in full.

Shareholder Equity = Total Assets - Total Liabilities

Positive or negative Shareholder Equity is an easy way for investors to see if a company is currently able to pay all of its debts or not. A company with a negative shareholder equity can be seen as a risky investment and may indicate unsound financial health.