Statement of Shareholder Equity

The fourth financial statement, called a statement of shareholder equity shows how shares, total equity and ownership types have changed over time. It reconciles the activity in the equity section of the balance sheet from period-to-period. So when you see the “snap-shot” of a balance sheet from one year to the next and wondered how it changed, the changes are documented in the Statements of Shareholders’ Equity. The changes in shareholders’ equity represent company profits or losses, dividends and (or) stock issue.

The specifics of Statements of Shareholder Equity can be extremely varied depending on the way any individual company is organized as it pertains to ownership, stock, preferred stock, paid-in-capital and how this capital is increased or diluted over time and explains what happened to cause any changes in Shareholders’ Equity.

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Note: This statement is particularly important if you “own stock” in a company but do not have voting rights associated with that stock and therefore no control or say in the running of the business; particularly with respect to ownership, dilution of stock by issuing additional shares and so forth. Be sure you know your rights, before investing in the stock of a company.

Sample Equity Statement


Fundamentals of Financial Statements, 4 Part Series