How to Calculate Common Equity
- 1). Multiply the common stock outstanding by the par value of the stock to determine common stock outstanding. Companies disclose this information on their balance sheet. For example, a company has 100,000 shares at $1 par value equals $100,000.
- 2). Determine the capital surplus for common stock. Usually this is under an account called Additional Paid-in Capital (APIC) on the balance sheet. In the example, a firm has APIC - Common Stock of $25,000.
- 3). Determine the retained earnings of the company. Companies disclose retained earnings on their balance sheet under the Stockholders' Equity section. In the example, the firm has $20,000 of retained earnings.
- 4). Add the common stock value plus the capital surplus plus retained earnings to determine common equity. In our example, $100,000 plus $25,000 plus $20,000 equals $145,000 of common equity.
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