Equity financing

What is the Book Value of Equity? Definition, Component, Formular, Calculation, and More

Definition: Book value of Equity can define as the company’s common equity, which is simply the amount that is available to be distributed within the shareholders. It is the net amount of the total assets of the firm, after all the liabilities have been subsequently paid off. Therefore, is can simply be described as the …

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Paid in capital Vs. Retained Earning? What Are the Key Difference?

For any company, the shareholder’s equity portion of its Statement of Financial Position will consist of different equity instruments and reserves. Among these, the most common are paid-in capital, additional paid-in capital, and retained earnings. Each of these balances represents a different aspect of the equity of a company. While these are all a part …

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What causes changes in additional paid-in capital?

Companies generate finance through many different sources. The main source of finance for them is equity. Equity consists of the equity instruments of a company, usually ordinary shares, issued to shareholders. A company issues these shares to its shareholders in exchange for compensation. Once shareholders buy shares, they can exchange them on the stock market. …

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What is the difference between paid-in capital and additional paid-in capital?

When it comes to the amount of capital a company has, two main accounts show the total amount, paid-in capital and additional paid-in capital. While both of these represent the total capital of a company obtained from its shareholders, they are still different. To understand the difference, however, it is vital to understand what each …

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Negative Shareholders’ Equity: 5 Reasons You Should Know

A company has no legal obligation to return Shareholders’ initial paid-in or contributed capital. Contributed capital comprising paid-in capital and share premium is utilized to fund business operations. When a business performs well and generates profits its equity rises. However, several factors cause the Shareholders’ equity to go in the negative column. As the total …

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