How to Calculate Stockholder Equity

Stockholder's equity is found on the financial statement called the balance sheet. It is one of the three sections of this statement and the other two are assets and liabilities. Stockholder's equity is the same as owner's equity in a sole proprietorship. In the case of a corporation, the stockholders are the owners. Figuring the stockholders equity is a way of showing how much the company is worth, and by extension, how much the shares of stock are worth.

Difficulty: Moderate

Instructions

Things You'll Need:

• Value of all assets at purchase
• Total depreciation of assets
• Value of liabilities such as payables and loans

1. Look up state accounting practices to determine if there is anything different about the way the stockholder equity calculation is figured in the state you are located. It should be noted that laws pertaining to the accounting process differ slightly from state to state. If there is ever any doubt as to how to calculate certain information, an accountant should be consulted. However, the basic equation for stockholder's equity remains the same.

2. Calculate all assets. This includes equipment, buildings, cash, receivables, and furniture. Add the value of all assets together to get a total amount. The value of tangible assets such as equipment and vehicles will be the price at which the items were purchased minus any depreciation that has accumulated.

3. Calculate all liabilities. Liabilities would include such would include payables, short-term and long-term debt, outstanding checks, and any other liabilities. Add these values together to get a total dollar amount

4. Subtract the total liabilities from the total assets. The dollar figure that you come up with is the total stockholder equity for the company.

Tips & Warnings

• Stockholders Equity can be broken down further into categories such as Common Stock, Current Year Net Income, Retained Earnings, and Additional Paid in Capital.

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