How to Find Common Equity on Financial Statements

A company's stockholders' equity on its balance sheet is the accounting value of all stockholders' interest in the company if the company were to pay off all of its debts. Common stock is typically the largest amount of stock that investors own in a company. Common equity is the value of only the common stockholders' interest, excluding preferred stockholders' interest. The greater a company's common equity, the higher the claim common stockholders have on the company's assets. You can calculate a company's common equity using information from its balance sheet.

Step 1

Find a public company's balance sheet in either its 10-Q quarterly reports or in its 10-K annual reports. You can obtain these reports from the investor relations page on the company's website or from the U.S. Securities and Exchange Commission's online EDGAR database.

Step 2

Identify the amount of total stockholders' equity, listed at the bottom of the "Stockholders' Equity" section of the balance sheet. For example, assume the balance sheet shows $100,000 in total stockholders' equity.

Step 3

Identify the amount listed on the "Preferred Stock" line item in the "Stockholders' Equity" section to determine the par value of preferred stock. In this example, assume the company has $10,000 in par value of preferred stock.

Step 4

Subtract the par value of preferred stock from total stockholders' equity to calculate common stockholders' equity. In this example, subtract $10,000 from $100,000 to get $90,000 in common stockholders' equity.

Tip

Monitor a company’s common equity over different accounting periods to determine any changes. A growing company should be increasing its common equity. A decreasing amount of common equity could reduce a company’s financial stability.

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