It is not uncommon for shareholders' equity and net worth to be used interchangeably on unaudited balance sheets of smaller companies. However, net worth is a more general term that also can be used to describe an individual's personal wealth. Also, partnership financial statements are more likely to use the term "net worth" than are corporations.
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Understanding Shareholders' Equity
Shareholders' equity appears on a company's balance sheet -- a financial statement that summarizes the company's financial position as of a given date, typically the end of a fiscal quarter or year. Shareholders' equity and net worth both can be calculated by subtracting a company's total liabilities from its total assets.
Shareholders' equity also is calculated by taking the sum of the par value of common and preferred shares issued and outstanding, additional paid-in capital, and retained earnings. Additional paid-in capital refers to the proceeds from a stock issuance in excess of the stock's par value, which is an arbitrarily set figure with little significance. Retained earnings is equal to the cumulative net income a company has earned throughout its operating history less any payments for dividends made to shareholders.