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Chapter 3. The Basics of Fundamental Ana... > Key Financial Figures and Ratios - Pg. 73

3 The Basics of Fundamental Analysis 73 Term Shareholders' Equity (Shareholders' Funds) Net Assets Description and Definition This is the balanced figure on the balance sheet, signifying the Book Value of the company for the ordinary shareholders (common stock holders). This is the company's total assets less its total liabilities, also known as book value. Comments and Significance Used in calculating the gearing ratio, this will be the same as the figure for Net Assets. This figure should be positive! Shareholders' Equity represents the shareholders' ownership of the company in terms of its Book Value. A company may have more shares than those that are already owned, and these form part of the company's authorized share capital. Only issued shares (outstanding shares) form part of the company's market value, and it is only the outstanding shares that we use in calculating the key financial ratios. Shares Outstanding (Issued Share Capital) These are the shares that are currently owned by investors.