If net income for a company was $50,000, $20,000 in cash dividends were paid and the shareholders invested $10,000 in cash, the stockholders' equity increased by $40,000.

Cash Dividends

Dividends paid out in the form of cash from a corporation's earnings to its shareholders.

Stockholders' Equity

The ownership interest of shareholders in the assets of a company, calculated as total assets minus total liabilities.

Net Income

The amount of profit a company generates after all expenses, taxes, and costs have been subtracted from its total revenue.