Stockholders' equity represents the residual interest in the assets of a corporation after deducting all its liabilities. On a balance sheet, it is often referred to as the "book value" of a company.
The Components of Equity
Contributed Capital: This includes Common and Preferred stock at par value plus any Additional Paid-in Capital (the amount investors paid above par).
Retained Earnings: The cumulative profits the company has kept rather than paying out as dividends.
Treasury Stock: Shares the company has bought back from the open market. This is a contra-equity account and is subtracted from the total.
AOCI: Items like unrealized gains or losses on investments that haven't passed through the income statement yet.
function calculateEquity() {
var commonStock = parseFloat(document.getElementById('commonStock').value) || 0;
var preferredStock = parseFloat(document.getElementById('preferredStock').value) || 0;
var apic = parseFloat(document.getElementById('paidInCapital').value) || 0;
var retainedEarnings = parseFloat(document.getElementById('retainedEarnings').value) || 0;
var otherIncome = parseFloat(document.getElementById('otherIncome').value) || 0;
var treasuryStock = parseFloat(document.getElementById('treasuryStock').value) || 0;
// Logic: Total Equity = (Capital + Earnings + Other) – Treasury
var totalEquity = (commonStock + preferredStock + apic + retainedEarnings + otherIncome) – treasuryStock;
var resultDiv = document.getElementById('equityResult');
var valueDiv = document.getElementById('finalValue');
var analysisDiv = document.getElementById('equityAnalysis');
resultDiv.style.display = 'block';
valueDiv.innerHTML = '$' + totalEquity.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var analysisText = "";
if (totalEquity > 0) {
analysisText = "The company has positive net worth. This indicates that the total value of assets exceeds its total liabilities and external debt obligations.";
} else if (totalEquity < 0) {
analysisText = "The company has negative equity (a deficit). This suggests liabilities exceed assets, which can be a sign of financial distress or significant past losses.";
} else {
analysisText = "The equity balance is zero, meaning assets and liabilities are perfectly balanced.";
}
analysisDiv.innerHTML = analysisText;
}