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    Shareholders' Equity

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    LJBernardo
    Your vesting schedule will be detailed in your stock option grant documents. These are the documents your company gives you when you get an offer. Or, if your company uses an equity management platform (such as Carta), you can find the details of your vesting schedule there—as well as how many options have already vested.

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    Shareholders' Equity

    Uploaded by

    LJBernardo
    83 views2 pages
    Your vesting schedule will be detailed in your stock option grant documents. These are the documents your company gives you when you get an offer. Or, if your company uses an equity management platform (such as Carta), you can find the details of your vesting schedule there—as well as how many options have already vested.

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    © © All Rights Reserved

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    Your vesting schedule will be detailed in your stock option grant documents. These are the documents your company gives you when you get an offer. Or, if your company uses an equity management platform (such as Carta), you can find the details of your vesting schedule there—as well as how many options have already vested.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    83 views2 pages

    Shareholders' Equity

    Uploaded by

    LJBernardo
    Your vesting schedule will be detailed in your stock option grant documents. These are the documents your company gives you when you get an offer. Or, if your company uses an equity management platform (such as Carta), you can find the details of your vesting schedule there—as well as how many options have already vested.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Shareholders' equity 

    represents the net worth of a company, which is the dollar amount that would be
    returned to shareholders if a company's total assets were liquidated, and all of its debts were repaid.
    Typically listed on a company's balance sheet, this financial metric is commonly used by analysts to
    determine a company's overall fiscal health.

    Shareholders' equity is also used to determine the value of ratios, such as the debt-to-equity


    ratio (D/E), return on equity (ROE), and the book value of equity per share (BVPS).

    KEY TAKEAWAYS

     Shareholders' equity represents the net worth of a company, which is the amount that would be
    returned to shareholders if a company's total assets were liquidated and all of its debts repaid. 
     This financial metric is frequently used by analysts to determine a company's general financial
    health. 
     Shareholders' equity may be calculated by subtracting its total liabilities from its total assets,
    both of which are itemized on a company's balance sheet. 
    How to Calculate Shareholders' Equity
    Shareholders' equity may be calculated by subtracting its total liabilities from its total assets—both of
    which are itemized on a company's balance sheet. 

    \text{Shareholders' Equity}=\text{Total Assets }-\text{ Total


    Liabilities}Shareholders’ Equity=Total Assets − Total Liabilities

    Total assets can be categorized as either current or non-current assets. Current assets are those that can
    be converted to cash within a year, such as accounts receivable and inventory. Long-term assets are
    those that cannot be converted to cash or consumed within a year, such as real estate properties,
    manufacturing plants, equipment, and intangible items like patents.

    Total liabilities consist of current liabilities and long-term liabilities. Current liabilities are debts that are
    due for repayment within one year, such as accounts payable and taxes payable. Long-term liabilities are
    obligations that are due for repayment in periods beyond one year, including bonds payable, leases, and
    pension obligations.

    Stockholders Equity provides highly useful information when analyzing financial statements. In events of
    liquidation, equity holders are last in line behind debt holders to receive any payments. This means that
    bondholders are paid before equity holders. Therefore, debt holders are not very interested in the value
    of equity beyond the general amount of equity to determine overall solvency. Shareholders, however,
    are concerned with both liabilities and equity accounts because stockholders equity can only be paid
    after bondholders have been paid.

    Components of Stockholders Equity

    Stockholders Equity is influenced by several components:


    1. Share Capital – amounts received by the reporting entity from transactions with its owners are
    referred to as share capital.
    2. Retained Earnings – amounts earned through income, referred to as Retained Earnings and
    Accumulated Other Comprehensive Income (for IFRS only).
    3. Net Income & Dividends – Net income increases retained earnings while dividend payments
    reduce retained earnings.

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