Shareholders' equity

Shareholders' equity is like a piggy bank for a company. When people invest money in the company by buying shares, that money goes into the piggy bank.

But the company also has to spend money to run its business, like paying employees and buying supplies. When the company makes a profit, some of that money goes back into the piggy bank.

Shareholders' equity is the amount of money in the piggy bank after the company has paid for all of its expenses. It shows how much the investors would get if the company was sold and all its debts were paid off.

So, if the piggy bank has a lot of money in it, the investors are happy because they might get a big payday if the company is sold. But if the piggy bank is empty or has a negative balance, the investors might be worried because there won't be much money left over for them.