The Stockholders' Equity calculator computes equity as the sum of several assets.
INSTRUCTIONS: Choose units and enter the following:
- (PCS) Premium on Common Stock
- (PPS) Premium on Preferred Stock
- (CS) Common Stock at Par
- (PS) Preferred Stock at Par
- (RE) Retained Earnings
Stockholders' Equity (SEq): The results are returns in US dollars. However, these can be automatically converted to compatible units via the pull-down menu.
The Math / Science
The Stockholders' Equity equation computes the sum of the following:
- CS = Common Stock at Par
- PCS = Premium on Common Stock
- PS = Preferred Stock at Par
- PPS = Premium on Preferred Stock
- RE = Retained Earnings
Stockholders' equity, also known as shareholders' equity or equity capital, represents the residual interest in the assets of a company after deducting its liabilities. It's the amount of capital that belongs to the company's owners (shareholders) and reflects the company's net worth.
In a simplified form, stockholders' equity can be calculated as:
Stockholders' Equity = Total Assets - Total Liabilities
It consists of various components, including:
- Paid-in Capital: This refers to the amount investors have paid for the company's stock. It comprises the par value of the stock plus any additional paid-in capital (premium) resulting from the stock being sold above its par value.
- Retained Earnings: These are the cumulative profits that the company has earned over time, minus any dividends paid out to shareholders. It represents the portion of net income that the company retains rather than distributes to shareholders.
- Treasury Stock: If a company buys back its own shares, those shares are considered treasury stock. This reduces the amount of outstanding shares and is subtracted from stockholders' equity.
- Accumulated Other Comprehensive Income: This includes gains or losses that have not been realized and are not included in net income. For instance, unrealized gains or losses on available-for-sale securities might be included here.
Stockholders' equity is an important metric for investors and analysts as it provides insights into a company's financial health and its ability to withstand losses. Higher stockholders' equity generally signifies a healthier financial position and might indicate a company's capacity for future growth or its ability to distribute dividends.
It's essential to analyze stockholders' equity along with other financial metrics and ratios to get a comprehensive understanding of a company's financial standing and performance.
The Accounting Ratio Calculator provides numerous standard equations used in business accounting, including the following:
- Best Possible Days Sales Outstanding - gives useful insight into delinquencies, as it considers only Current Receivables.
- Current Ratio - A liquidity ratio that measures the ability to pay short-term liabilities.
- Days Sales Outstanding - tests the efficiency of the conversion of receivables into cash.
- Debt to Equity Ratio - measures how a company is leveraging its debt against the resources of its owners.
- Inventory Turnover Ratio - reveals how many times inventory turns over in a period
- Net Cash Flow from Operations - Net income - Increase in Receivables + Increase in Payables.
- Quick Assets - cash and assets that can be converted quickly to cash
- Quick Ratio (aka Acid Test) - measures the ability to pay short-term liabilities with cash and assets quickly convertible to cash
- Stockholder's Equity - sum of Common Stock at Par, Premium on Common Stock, Preferred Stock at Par, Premium on Preferred Stock and Retained Earnings