# How to Find Common Equity on Financial Statements

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One of the most important financial documents for a company is its income statement. This document tracks the financial status of a business measured over a set period of time (usually a year). If you need to find total common equity on a financial statement, you can do so fairly easily.

## Financial Statement Basics

Financial statements start with the ultimate amount of revenue brought into the company, which is then balanced by a number of expenses: returns and discounts, cost of goods sold, operating expenses, depreciation, interest balances and income taxes.

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The ultimate summary of all these transactions results in a sum called net income; this is a value representing the maximum return the company could give to its shareholders. If this net income is divided by the count of outstanding shares, this calculator returns a number representing the average earnings per share. This gives you a good number for comparison with other standard financial ratio calculations.

## What Is Common Equity?

With regard to the financial documents of a company, common equity has a somewhat flexible definition, depending on the state of the net income. According to writers from UpCounsel, common equity is defined as the sum of common equity investments, also including the total shares of common stock (from various types of stocks and bonds), retained earnings and paid-in capital. In total, this question pertains to the structure of the income statement.

An income statement starts with the absolute total value of all revenues, and then it starts stepping down from that point. These decreases involve thoroughly calculated steps including costs of goods sold, operating expenses, depreciation, interest costs and income tax. As a fund moves through these steps, its total amounts after each calculated situation resolve themselves into a more limited fund.

Consider also:What Is Included in a Common Stockholder's Equity?

## Finding Common Equity on Statements

To take these numbers into additional calculations, it's important to have the records of monetary transfer at hand. To find common equity, look at the company's balance sheet. Find the quantity of outstanding stock and multiply it by the face value of the stock to obtain common equity. Keep in mind that in conditions of high volatility, these calculations may be affected by other conditions.

For example: paid-in capital is the total of the income generated from investors who choose to buy when new stock is issued. This capital measure includes funds raised through equity, and common equity represents the total sum of all paid-in capital. The only pieces exempt from this are any funds allocated as retained earnings (which are withheld to reinvest into the company) and preferred equity investors, who bought shares on guaranteed terms the company must see fulfilled.

## Conditions of Common Equity

Equity numbers come from the income statement and end up subject to certain stipulations within the budget code. Return on common equity (ROCE) is a calculation made by calculating the ratio of (net income - preferred dividend value) / (average common equity). The return on common equity formula should be reasonably easy to calculate if the right numbers are available.