Average Stockholders' Equity

Definition: Average Stockholders' Equity is the simple arithmetic average of beginning and ending Stockholders' Equity for a reporting period: (Beginning Stock…

Average Stockholders' Equity is the simple arithmetic average of beginning and ending Stockholders' Equity for a reporting period: (Beginning Stockholders' Equity + Ending Stockholders' Equity) / 2. It is used in the denominator of Return on Equity (ROE = Net Income / Average Stockholders' Equity) so that the income-statement numerator (a flow measure) is matched against an averaged stock measure that better represents equity capital deployed during the period.