Total Liabilities & Shareholders’ Equity

What are Total Liabilities & Shareholders’ Equity?

Total Liabilities & Shareholders’ Equity are the sum of Total Equity and Total Liabilities. Together, they equal Total Assets. 

Why are Total Liabilities & Shareholders’ Equity Important?

Together, alongside Total Assets, Total Liabilities & Shareholders’ Equity make up the complete picture of a company’s balance sheet. In accounting, it’s said that the most important equation is:

Assets – Liabilities = Equity or when flipped Assets = Liabilities + Equity. 

Knowing Total Liabilities & Shareholders’ Equity of a company is essential to understanding the complete balance sheet.