Shareholders' Equity: Formula, Apple's 10-K Worked Through, and Normal Levels by Industry

Michael Whitman · Trading since 2017, full-time since 2020 · YouTube creator, 137K subscribers · Published 2026-09-06 · Updated 2026-11-02 · Reviewed 2026-11-01

Shareholders’ equity is the part of a balance sheet that belongs to the owners: total assets minus total liabilities. Apple’s was $73.73 billion on 27 Sep 2025, and the same figure comes out whether you subtract its debts from its assets or add up its equity accounts.

That second route is where the number gets interesting. Apple earned $112.01 billion in fiscal 2025 and still carried an accumulated deficit, because it handed back almost as much as it made. This page works through that filing line by line, then shows what a normal level of equity looks like in each industry, using every large SEC filer rather than one hand-picked pair.

How it works

Start from the balance-sheet identity: assets equal liabilities plus equity. Rearranged, equity is whatever is left of the assets once every obligation to lenders, suppliers and tax authorities has been counted. Nothing is measured directly; the residual is the measurement.

The second formula builds the same figure from the owners’ side. Equity = paid-in capital (what shareholders paid for their shares) + retained earnings (profits kept, less dividends) + accumulated other comprehensive income (unrealized gains and losses that skip the income statement) - treasury stock (shares bought back and held). Companies that cancel repurchased shares have no treasury line; the cost lands in retained earnings instead.

Equity grows from profit and shrinks with payouts. Equity grows from profits that start as operating income, which rose a median 9.62% in 2025 filings where revenue rose 5% to 10%. It falls with dividends, buybacks and losses, and it moves with new share issues and with stock-based pay.

Shareholders’ equity, stockholders’ equity and book value are the same figure. US filings tend to say stockholders; the frames this page uses call the tag StockholdersEquity. One wrinkle: where a subsidiary has outside owners, their slice (noncontrolling interest) sits inside total equity but outside the parent’s shareholders’ equity.

A worked example: Apple’s fiscal 2025 filing

Route one, from the balance sheet. On 27 Sep 2025 Apple reported total assets of $359.24 billion and total liabilities of $285.51 billion. Subtracting gives $73.73 billion of shareholders’ equity, which is 20.52% of assets.

Route two, from the equity accounts. Common stock and additional paid-in capital came to $93.57 billion. Retained earnings were negative: an accumulated deficit of $14.26 billion. Accumulated other comprehensive loss was $5.57 billion. Then $93.57 billion - $14.26 billion - $5.57 billion = $73.74 billion on rounded figures, and exactly $73,733 million on the unrounded ones in the filing. Two routes, one number, which is the whole point of double entry.

Route three, through the year. The statement of shareholders’ equity in the same 10-K reconciles the opening balance of $56.95 billion to the closing one:

Read the table the way an analyst would. Profit added $112.01 billion, and dividends plus buybacks took out $105.47 billion, or 94.16% of that profit. Equity still rose $16.78 billion, and about half of the rise, $8.64 billion, came through employee stock: $13.25 billion of stock-based pay, which adds to paid-in capital without any cash coming in, plus $1.50 billion of shares issued, less $6.11 billion of shares withheld for employees’ taxes. The repurchases were charged against retained earnings, which is why a company this profitable reports a deficit there: the line records what was kept, and Apple kept little.

One caution from the same filing. The statement’s total column shows the repurchase as $89.30 billion, while the retained earnings column charges $90.05 billion; the column figures are the ones that add up to the closing balance, so the table uses them. The cash flow statement shows $90.71 billion paid for repurchases in the year, a third figure, because cash moves on settlement dates.

What is a normal equity-to-assets ratio?

There is no single good level; the industry sets it. A bank funds itself mostly with deposits, which are liabilities, so its equity is a thin slice of a large balance sheet. A mining company funds long-lived assets with more owners’ money. Dividing equity by total assets (the equity ratio) puts both on one scale, and the scale shows how different they are.

Across 734 SEC filers with $10 billion or more of assets, the median equity ratio was 26.79%, and the middle half ran from 12.51% to 43.92%. The 98 banks and savings institutions in the sample had a median of 11.52%. Manufacturers had 39.79%, and mining, oil and gas 51.73%. JPMorgan Chase’s ratio was 8.19% on 31 Dec 2025, NVIDIA’s 76.06% on 25 Jan 2026, and neither number says anything on its own about which business is better run.

The pair most explainers quote, measured on the same date. Coca-Cola’s equity was 30.69% of its assets on 31 Dec 2025 and PepsiCo’s 19.00% on 27 Dec 2025, two consumer-staples companies of similar size about 12 points apart.

Book value against market value

Book value is arithmetic on recorded costs; market value is what buyers pay for the shares. Property is carried at cost less depreciation, and brands, customer lists and software a company built itself mostly never reach the balance sheet at all. So book value tends to sit below economic value, furthest below it where the value is least physical.

Apple shows why. Its $73.73 billion of equity leaves out the brand, the installed base of devices and the future cash flows, none of which the accounting identity was built to capture, so a gap between book and market value is not by itself a mispricing. A price-to-book ratio compares those two worlds and only means something against companies that keep similar books.

Return on equity inherits the same problem. Apple’s net income was 151.91% of its year-end equity, or 171.42% of the average of its opening and closing equity. Those percentages describe a denominator shrunk by repurchases. A measure that ignores the equity figure entirely is basic earning power, operating income over total assets, which put NVIDIA first at 63.05% in a fiscal 2025 sample of 381 large US companies outside finance.

The original data

Sample: the SEC’s XBRL frames for balance sheets dated nearest the end of calendar 2025 (frame CY2025Q4I, downloaded 1 Nov 2026). Of 915 filers reporting total assets of $10 billion or more, 799 have a ticker in the SEC’s ticker file and 734 report the StockholdersEquity tag; 52 of the other 65 report only equity including noncontrolling interests and are left out.

Dates and coverage. Balance-sheet dates run from 22 Nov 2025 to 1 Feb 2026, and 630 of the 734 are dated 31 Dec 2025. The ticker file is not a list of US companies: at least 37 give a business address outside the US. Industry comes from each filer’s SIC code in the SEC’s submissions data, grouped into the standard SIC divisions; 5 filers had no usable code, and construction (7 filers) and agriculture (1) are too small to chart.

The finding: the industry moves the typical equity ratio by almost 40 points. Finance, insurance and real estate (255 filers) had a median of 13.11%; transportation, communications and utilities (92) 25.52%; retail (40) 27.06%; wholesale (18) 27.25%; services (97) 33.25%; manufacturing (197) 39.79%; mining, oil and gas (22) 51.73%. A 15% ratio is ordinary for a large financial company and thin for a manufacturer, which is why a cross-industry screen on this ratio mostly sorts companies by sector.

Negative equity is rarer, and usually not distress. 30 of the 734 (4.09%) had negative shareholders’ equity, the same 30 companies and figures this page reported from the 27 Oct download, and 24 of them reported a 2025 profit; 5 reported a loss, and 1 had no annual figure in the frames.

Ten of the 30 had positive retained earnings, and at 8 of those 10 the treasury stock line alone was larger. McDonald’s, for example, showed $70.28 billion of retained earnings, $79.32 billion of treasury stock and equity of -$1.79 billion, with 2025 net income of $8.56 billion. Lowe’s showed an accumulated deficit of $10.84 billion and equity of -$9.92 billion while earning $6.65 billion in the year to 30 Jan 2026.

Checks. The identity holds in the frames: of the 571 filers that also tag total liabilities on the same date, 517 show assets minus liabilities equal to total equity within 0.5% of assets. Nasdaq’s quarterly balance sheets matched the SEC equity figure for 29 of the 30 negative-equity companies when they were first checked. Every company and its ratio is in the equity ratio file, the 30 are in the negative equity file, and Apple’s lines are in the bridge file.

When it fails

It fails as a valuation. Equity is built from historical costs, so it understates businesses whose value is in brands and code, and it can overstate a business whose assets would fetch less than their carrying amount in a sale. A share trading below book is not automatically cheap; the assets may be worth less than the books say.

It fails as a distress signal on its own. Negative equity has two causes that look identical on the balance sheet: years of losses, or years of returning more cash than the company earned, often with borrowed money. The 24 profitable companies among the 30 above are mostly the second kind; Lumen’s 2025 loss of $1.74 billion beside a $19.70 billion deficit is the first. The income statement and the buyback lines in the cash flow statement separate them; the equity line cannot.

It fails across industries. An equity ratio of 13% is the median for a large financial company and well below the bottom quarter of manufacturers, which starts at 28.12%, so comparing it across sectors measures the business model rather than the strength of either company.

It fails inside return on equity. A shrinking denominator raises the ratio with no change in profit, and once equity turns negative the ratio stops meaning anything. Read it beside the debt-to-equity ratio, which moves the other way when buybacks are funded with borrowing.

And it fails as a measure of cash. Retained earnings and paid-in capital are records of where money came from, not money in an account. Apple’s equity statement shows $15.41 billion of dividends declared in a year it carried an accumulated deficit; dividends are paid from cash, not from the equity line.

Questions people ask

What is an example of shareholders’ equity?

Apple on 27 Sep 2025: $359.24 billion of assets minus $285.51 billion of liabilities is $73.73 billion, equal to $93.57 billion of paid-in capital less a $14.26 billion accumulated deficit and a $5.57 billion comprehensive loss.

What is a good shareholder equity ratio?

It depends on the industry. Among 734 large SEC filers the median was 26.79%, but banks sat near 11.52% and manufacturers near 39.79%, so compare a company with its own sector.

Is shareholder equity the same as dividends?

No. Dividends are paid out of the company and reduce equity; Apple’s fiscal 2025 dividends took $15.41 billion off its retained earnings.

How do you calculate total shareholders’ equity?

Total assets minus total liabilities, or paid-in capital plus retained earnings plus accumulated other comprehensive income minus treasury stock. Total equity on a balance sheet also includes any noncontrolling interest.

Related

Balance sheet is the statement this figure closes, and its identity is what makes the two formulas agree. Retained earnings is the component that buybacks and dividends drain, as Apple’s deficit shows. And assets is the side of the identity equity is measured against, which is why the equity ratio divides by it.

This page is educational, not financial advice. Test every idea on your own charts before risking money.