All of the following are components of stockholders' equity, except notes payable.
The amount that a business could give its shareholders if all of its assets were converted to cash and all of its obligations were settled is known as shareholders' equity. The calculation of shareholders' equity takes into account four factors: outstanding shares, additional paid-in capital, retained earnings, and treasury stock.
A firm has sufficient assets to cover its liabilities if shareholders' equity is positive; otherwise, it has more liabilities than assets. A financial indicator called shareholders' equity aids investors in determining a company's value and long-term viability.
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