What is Foolsaurus?

It's a glossary of investing terms edited and maintained by our analysts, writers and YOU, our Foolish community. Get Started Now!


Statement of shareholders' equity

The statement of shareholders' equity is the financial statement that details changes to the equity portion of the balance sheet, including retained earnings, common and preferred shares (as well as treasury stock), and other comprehensive income.

Expanded Definition

The last portion of the balance sheet is the equity portion. This is usually broken down into several lines, including retained earnings, additional capital, value of shares, etc. The statement of shareholders' equity shows how these balances were arrived at and how they changed over the previous term.

To illustrate, let's use Coca-Cola's statement from its 10-K for 2007.

Here is the equity portion of the balance sheet:

SHAREOWNERS’ EQUITY 2007 2006
Common stock, $0.25 par value; Authorized—5,600 shares;
Issued—3,519 and 3,511 shares, respectively
$ 880 $ 878
Capital surplus 7,378 5,983
Reinvested earnings 36,235 33,468
Accumulated other comprehensive income (loss) 626 (1,291)
Treasury stock, at cost—1,201 and 1,193 shares, respectively (23,375) (22,118)
TOTAL SHAREOWNERS’ EQUITY $21,744 $16,920

Here is the corresponding section from its statement of shareholders' equity. Note how this breaks down each line item, showing how each changed from 2006 to 2007.

2007
Common stock
Balance at beginning of year $ 878
Stock issued to employees exercising stock options 2
Balance at end of year 880
Capital surplus
Balance at beginning of year 5,983
Stock issued to employees exercising stock options 1,001
Tax (charge) benefit from employees’ stock option and restricted stock plans (28)
Stock-based compensation 309
Stock purchased by former shareholders of glacéau 113
Balance at end of year 7,378
Reinvested earnings
Balance at beginning of year 33,468
Adjustment for the cumulative effect on prior years
of the adoption of Interpretation No. 48
(65)
Net income 5,981
Dividends (per share—$1.36 in 2007) (3,149)
Balance at end of year 36,235
Accumulated other comprehensive income (loss)
Balance at beginning of year (1,291)
Net foreign currency translation adjustment 1,575
Net gain (loss) on derivatives (64)
Net change in unrealized gain on available-for-sale securities 14
Net change in pension liability 392
Balance at end of year 626
Treasury stock
Balance at beginning of year (22,118)
Stock issued to employees exercising stock options 428
Stock purchased by former shareholders of glacéau 66
Purchases of treasury stock (1,751)
Balance at end of year (23,375)
TOTAL SHAREOWNERS' EQUITY $21,744


Related Terms

Recent Mentions on Fool.com

Failed to load RSS feed from http://www.fool.com/Feeds/Search.ashx?q="statement+of+shareholders+equity" &filter=p&site=USMF&sort=date%3aD%3aR%3ad1&count=5!
Advertisement