Equity
Assets minus liabilities — the part of the company that genuinely belongs to its owners.
Equity is made up of called-up share capital, the share premium account, any other reserves, retained earnings from previous years and the current year's result.
Negative equity means liabilities exceed assets. It is one of the strongest signals a balance sheet gives, and it bears directly on whether the directors can keep trading — which is why the auditor's or directors' statement about going concern is worth reading alongside it.
In a profitable year equity grows by the net profit if nothing is distributed; in a loss-making year it shrinks.
Where this figure comes from
Read from the “Total equity” line of the balance sheet in the filed financial statements.
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