Shareholders' Equity
When the owners are shareholders, the interest can be called shareholders' equity; the accounting remains the same, and it is ownership equity spread out among shareholders. If all shareholders are in one and the same class, they share equally in ownership equity from all perspectives. However, shareholders may allow different priority ranking among themselves by the use of share classes and options. This complicates both analysis for stock valuation and accounting.
The individual investor is interested not only in the total changes to equity, but also in the increase / decrease in the value of his own personal share of the equity. This reconciliation of equity should be done both in total and on a per share basis.
- Equity (beginning of year)
- + net income inter net money you gained
- − dividends how much money you gained or lost so far
- +/− gain/loss from changes to the number of shares outstanding.
- = Equity (end of year) if you get more money during the year or less or not anything
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Famous quotes containing the word equity:
“If equity and human natural reason were allowed there would be no law, there would be no lawyers.”
—Christina Stead (1902–1983)