The shareholder equity ratio is a key financial ratio that measures the relationship between a company's shareholder equity and its total assets. This ratio is also sometimes referred to as the equity to assets ratio.
The shareholder equity ratio can be a useful tool for investors and analysts when trying to assess the financial health of a company. A company with a high shareholder equity ratio is generally considered to be in a stronger financial position than a company with a low shareholder equity ratio.
One limitation of the shareholder equity ratio is that it does not take into account the amount of debt that a company may have. Therefore, it is important to consider this ratio in conjunction with other financial ratios, such as the debt to equity ratio.
Where is shareholders equity on financial statements?
Shareholders equity is the portion of a company's assets that are owned by the shareholders. This can be found on the balance sheet, which is one of the three main financial statements. The balance sheet shows a company's assets, liabilities, and shareholders equity.
What does a high shareholder equity ratio mean? A high shareholder equity ratio means that the company has a lot of equity relative to its size. This is usually a good thing, as it means that the company is doing well and has a strong financial foundation. However, it can also mean that the company is over-leveraged and may be at risk of financial problems in the future.