Investor’s equity = $1.5M / $7.5M = 0.20 = 20%

Mon, 04 May 2026 08:57:46 +0000

Understanding Investor’s Equity: A Clear Guide to the Equity Ratio (20%) When evaluating company performance, one of the most critical metrics investors focus on is investor’s equity. Recently, a key snapshot showed investor’s equity standing at $1.5 million against total shareholder equity of $7.5 million — revealing a clear 20% equity ratio. But what does this really mean, and why is understanding this ratio essential for informed investing? ### What Is Investor’s Equity? Investor’s equity, also known as shareholders’ equity, represents the residual value of a company’s assets after deducting liabilities. It reflects the net worth attributable to shareholders — the backbone of a company’s financial health. Key components include common stock, retained earnings, and additional paid-in capital.