Shareholder equity represents the ownership value held by shareholders in a company. It is calculated by subtracting a company's total liabilities from its total assets. This figure indicates how much of the company is owned by shareholders after all debts have been paid. Shareholder equity can include items such as common stock, preferred stock, and retained earnings. A positive shareholder equity suggests that a company is financially healthy, while negative equity may indicate financial troubles. Investors often look at this metric to assess a company's stability and potential for growth.