How to Calculate Stockholders Equity – Cost Calculator

Stockholders' Equity Calculator

Stockholders' equity, also known as shareholders' equity or owners' equity, represents the residual value of a company's assets after all liabilities have been paid. It's a crucial indicator of a company's financial health and is often referred to as the "book value" of the company. Essentially, it's the amount of money that would be returned to a company's shareholders if all assets were liquidated and all debts were paid off.

Understanding the Components of Stockholders' Equity

Stockholders' equity is typically comprised of several key accounts on a company's balance sheet:

Common Stock: This represents the par value of the shares issued to common shareholders. Common stock holders have voting rights and a residual claim on assets.
Preferred Stock: This represents the par value of shares issued to preferred shareholders. Preferred stock typically carries fixed dividend payments and has priority over common stock in receiving dividends and asset distribution upon liquidation, but usually no voting rights.
Additional Paid-in Capital (APIC): Also known as "Capital in Excess of Par," this is the amount of money shareholders paid for shares above their par value. For example, if a share has a par value of $1 but is sold for $10, $1 goes to common/preferred stock, and $9 goes to APIC.
Retained Earnings: This is the cumulative amount of net income (profits) that a company has retained over time, rather than distributing it to shareholders as dividends. It represents the profits reinvested back into the business.
Treasury Stock: This represents shares of the company's own stock that it has repurchased from the open market. Companies buy back their own stock for various reasons, such as to reduce the number of outstanding shares, increase earnings per share, or prevent hostile takeovers. Treasury stock is a contra-equity account, meaning it reduces total stockholders' equity.

The Stockholders' Equity Formula

The most common way to calculate stockholders' equity by its components is:

Stockholders' Equity = Common Stock + Preferred Stock + Additional Paid-in Capital + Retained Earnings - Treasury Stock

Alternatively, based on the fundamental accounting equation (Assets = Liabilities + Equity), you can also calculate it as:

Stockholders' Equity = Total Assets - Total Liabilities

Our calculator below uses the component-based approach to help you understand the individual contributions to the total equity.

How to Use the Stockholders' Equity Calculator

Enter the values for each component of stockholders' equity from a company's balance sheet into the respective fields. The calculator will then provide you with the total stockholders' equity.

Calculate Stockholders' Equity

Common Stock (Par Value):

Preferred Stock (Par Value):

Additional Paid-in Capital:

Retained Earnings:

Treasury Stock (Cost):

function calculateEquity() { var commonStock = parseFloat(document.getElementById("commonStock").value); var preferredStock = parseFloat(document.getElementById("preferredStock").value); var additionalPaidInCapital = parseFloat(document.getElementById("additionalPaidInCapital").value); var retainedEarnings = parseFloat(document.getElementById("retainedEarnings").value); var treasuryStock = parseFloat(document.getElementById("treasuryStock").value); // Handle NaN values by treating them as 0 if (isNaN(commonStock)) commonStock = 0; if (isNaN(preferredStock)) preferredStock = 0; if (isNaN(additionalPaidInCapital)) additionalPaidInCapital = 0; if (isNaN(retainedEarnings)) retainedEarnings = 0; if (isNaN(treasuryStock)) treasuryStock = 0; var totalEquity = commonStock + preferredStock + additionalPaidInCapital + retainedEarnings – treasuryStock; document.getElementById("result").innerHTML = "Total Stockholders' Equity: $" + totalEquity.toLocaleString('en-US', { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; }

Example Calculation

Let's consider a hypothetical company, "InnovateTech Inc.", with the following figures from its balance sheet:

Common Stock (Par Value): $100,000
Preferred Stock (Par Value): $50,000
Additional Paid-in Capital: $200,000
Retained Earnings: $500,000
Treasury Stock (Cost): $20,000

Using the formula:

Stockholders' Equity = $100,000 (Common Stock) + $50,000 (Preferred Stock) + $200,000 (Additional Paid-in Capital) + $500,000 (Retained Earnings) - $20,000 (Treasury Stock)

Stockholders' Equity = $830,000

This means that after accounting for all liabilities, the shareholders of InnovateTech Inc. have a claim of $830,000 on the company's assets.