How To Calculate Stockholders Equity

Stockholders Equity Meaning:

  

First of all, we need to know, “what is stockholders equity”, then you can easily calculate it on Balance Sheet or From Statement of Stockholders Equity.

  

Stockholders Equity is simply the Equity that shows the rights of Stockholders (owners) in the corporation business. It is the same as in case of Sole Proprietorship (Owners’ Equity) or in case of companies (Equity) but to show differentiation, this word is specially used in case of Corporation Business, that is much larger company business.

  

If you don’t know about, “Statement of Changes In Equity”, then read out this article as well to get better understanding the formula. 

  

How to calculate stockholders Equity On Balance Sheet

Stockholders Equity Formula:

Assets - Liabilities = Stockholders Equity 

  

It is the same Formula as show in Accounting Equation, but just place the word Stockholders and nothing else. 

  

Example:

Suppose The Balance Sheet of ABC Corporation shows us the following information: 

Total Assets = Rs. 600000, Total Liabilities = 250000, then Stockholders Equity by using the formula = 600000 - 250000 = Rs. 350000 

  

How to calculate stockholders Equity From Statement of Stockholders Equity 

  

Stockholders Equity Statement is prepared to calculate the value of Total Stockholders Equity. 

   

+ Common Stock during this year  

+ Preferred Stock during this year  

+ Additional Paid-UP Capital in the current year  

+ Net Income For the Year  

+ Retained Earnings in the year  

+Net Income for the period  

- Treasury Stocks in the current year  

= Total Stockholders Equity As at The End of Year  

  

So, you can calculate Stockholders Equity from the Balance Sheet and By Preparing Statement of Stockholders Equity.