Own capital is the totality of a company's assets minus its total liabilities. It is one of the most common financial ratios used by analysts to determine the financial health of a company.

Own capital represents net cost of the company or the amount that would be returned to shareholders if all of the company's assets were liquidated and all debts were repaid.

What it is

Own capital can be negative or positive. If the ratio is positive, it means the company has more than enough assets to cover its liabilities. If this indicator is negative, the company has debts that outweigh its assets.

In general, a company with negative capital is not considered safe choice investment because either its total assets are too low or its total liabilities are too high. In either case, the company has more debt than its current assets can satisfy, putting them at risk of loan default and bankruptcy.

Equity is used in accounting in several ways. Often the word "equity" is used to refer to the ownership interest in a business. Examples include share capital or equity.

Sometimes capital is used for designation of a set of obligations:

Assets = Liabilities + Equity becomes assets = Shares

Calculation methods

All the information necessary to calculate the company's equity capital, available on her balance. The calculation is to determine the companies' total assets and total liabilities, including .

Current assets include retained earnings, stockholders' equity, and other cash held in bank and savings accounts, stocks, bonds, and money market accounts.

Long-term assets include equipment, property, illiquid investments and vehicles. Current liabilities include any payments and interest on loans in the current year, accounts payable, wages, and insurance premiums.

Long-term liabilities include any debts that are not due in the current year, such as mortgage loans, loans and payments to bondholders.

Own capital is reflected in line 1300 of the balance sheet. Calculation traditional ways is as follows:

Equity = value in line 1300

Shareholders' equity can also be expressed as a company's share capital plus retained earnings, less the value of treasury shares. However, this method is less common. Although both methods should produce the same figure, using total assets and total liabilities is more a clear example financial condition of the company.

Equity is important because it represents real value of the share in the authorized capital. Investors who own shares in a company are usually interested in their own personal equity in the company represented by their shares.

However, such personal capital is a function of the total capital of the company itself, so a shareholder interested in his own earnings will necessarily have an interest in the company.

Owning shares in a company provides capital gains for the shareholder and potential gains over time. It also often gives the shareholder voting rights at the founders' meeting. All these benefits further increase shareholder interest in the company.

Most often, the average value for the year is used to assess equity capital, which allows you to most accurately determine its variations over time.

Formula for calculation next:

Sk = (Sk at the beginning of the year + Sk at the end of the year) / 2

The data is taken from the balance sheet for the relevant reporting periods.

Shareholders have voting right and other privileges which come only with title, since capital represents a claim to a proportionate share of the assets and earnings of the company. These claims are generally those of creditors, but only shareholders can truly participate in and benefit from the growth in the value of the enterprise.

Some financial instruments have the characteristics of equity, but are not actually equity. For example, convertible debt instruments are loans that convert into equity when the company (the borrower) crosses certain thresholds, thereby turning the lender into an owner in certain cases.

Stock options also act like shares in that their value changes with the value of the underlying shares, but option holders generally do not have voting rights and cannot receive dividends or other financial instruments.

It's important to understand that while equity represents a company's net worth, a company's stock is ultimately only worth what buyers are willing to pay for it.

It is highly desirable that the amount of equity capital or net assets be higher than the amount authorized capital companies. This criterion is important from the point of view of maintaining the investment attractiveness of the business.

A business must pay for itself and ensure an influx of new capital. Sufficient equity capital is one of the most significant indicators of the quality of a company’s business model.

What is own working capital? Details are in this article.

How to calculate net worth? The formula is necessary for controlled debt. The formula contains the indicator equity. Calculate the capitalization ratio for controlled debt. This coefficient is needed to recognize income tax expenses.

Net worth formula

The rationale for this position is given below in the materials of the Glavbukh System

When calculating income tax, take into account interest on controlled debt as part of non-operating expenses (subclause 2, clause 1, article 265 of the Tax Code of the Russian Federation).

If the organization uses the accrual method, then include the accrued interest in expenses for the last day of the reporting (tax) period (paragraph 2, paragraph 2, article 269 of the Tax Code of the Russian Federation, letter of the Federal Tax Service of Russia for Moscow dated February 9, 2010 No. 16- 15/012742).

If the organization uses the cash method, then include the accrued interest in expenses for the last day of the reporting (tax) period in which they were paid (paragraph 2, paragraph 2, article 269, paragraph 3, article 273 of the Tax Code of the Russian Federation).

When taxing profits, interest on controlled debt can be taken into account only within the limits of the norms (clause 2 of Article 269, subclause 2 of clause 1 of Article 265 of the Tax Code of the Russian Federation). Use the following rules to determine your interest cap.

For the last day of each reporting (tax) period, calculate the maximum amount of interest on controlled debt taken into account when calculating income tax. In this case, follow the formula:

The amount of interest accrued in the reporting (tax) period means interest accrued in the last quarter (month) of the reporting (tax) period. Thus, size limit determine the percentage separately based on the results of each reporting period, and not on an accrual basis. If the ratio of the amount of outstanding controlled debt and the amount of equity capital changes in the future reporting period Compared to the previous one, there is no need to recalculate the amount of interest taken into account when calculating income tax. This conclusion was made in letters of the Ministry of Finance of Russia dated May 21, 2010 No. 03-03-06/1/343 and.

Calculate the capitalization ratio as follows:*

Calculate the capitalization ratio separately based on the amount of outstanding controlled debt to each organization in relation to which there is a debt obligation. This follows from the provisions of paragraph 2 of Article 269 of the Tax Code of the Russian Federation and is confirmed by letter of the Ministry of Finance of Russia dated August 3, 2010 No. 03-03-06/1/511.

The specified procedure for determining the values ​​of the capitalization coefficient and the maximum interest rate on controlled debt applies to organizations that use both the accrual method and the cash method (clause 2 of Article 269 of the Tax Code of the Russian Federation). That is, with the cash method, indicators must also be calculated for the last day of each reporting (tax) period, regardless of in which period the interest was paid (accounted for as expenses) (letter of the Ministry of Finance of Russia dated August 19, 2010 No. 03-03- 06/1/559).

Compare the maximum amount of interest received by calculation with the amount of interest actually accrued (paid) on the loan (credit).

If the actual accrued (paid) interest is less than the maximum amount, take it into account in tax expenses in full. If it is more, only the maximum value can be taken into account when calculating income tax (clause 3 of Article 269 of the Tax Code of the Russian Federation).

The remaining amount (the positive difference between the amount of accrued (paid) interest and the limit) for purposes tax accounting considered dividends. From this amount the organization must withhold income tax at a rate of 15 percent. This follows from paragraph 4 of Article 269, subparagraph 3 of paragraph 3 of Article 284 of the Tax Code of the Russian Federation.

If the organization's equity capital is negative or equal to zero, then it is impossible to determine the capitalization ratio. In this case, do not take into account interest on controlled debt in expenses (the maximum interest is zero) (letter of the Ministry of Finance of Russia dated July 16, 2010 No. 03-03-06/1/465 and the Federal Tax Service of Russia dated April 10, 2012 No. ED-4 -3/6008).

The legislation does not contain a clear answer to this question. The position of regulatory agencies on this issue is also ambiguous.

The amount of equity is defined as the difference between the amount of assets and the amount of liabilities. At the same time, debts on taxes and fees, as well as the amount of deferments, installments and investment tax credits do not reduce the amount of equity capital (clause 2 of Article 269 of the Tax Code of the Russian Federation). When calculating the amount of equity capital, take into account the amounts of debt for contributions to compulsory pension (social, medical) insurance and contributions to insurance against accidents and occupational diseases, since such contributions do not relate to taxes or fees (Article 12?15 of the Tax Code of the Russian Federation, letter from the Ministry of Finance Russia dated March 7, 2013 No. 03-03-06/1/6908).

If the organization has overpaid taxes, then include such amounts in the calculation of the amount of equity capital. This is explained by the fact that overpaid amounts of taxes in accounting are taken into account as accounts receivable and are reflected in the Balance Sheet on line 1230 “Accounts receivable”. At the same time, paragraph 3 of the Procedure, approved by order of January 29, 2003 of the Ministry of Finance of Russia No. 10n and the Federal Securities Commission of Russia No. 03-6/pz, states that the assets accepted for calculation when determining the amount of equity capital include receivables without any - or exceptions.

Determine the amount of equity capital based on accounting data as of the last date of the reporting (tax) period for which income tax is calculated. Equity formula:

Net worth formula

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Many articles and studies are devoted to the analysis of the structure, composition, and size of equity capital. First of all, you need to understand that it is the property of the enterprise itself. The entire capital of the organization is reflected in the balance sheet of the organization.

You will need:

• Authorized capital
• Additional capital
• Retained earnings
• Own funds reserve

Own capital in the balance sheet is reflected in the liability side of the balance sheet. By its nature, it represents the size of investment potential and power. It is with the growth of equity capital that this potential increases. The structure of equity capital is also presented in the balance sheet of the enterprise. Using it, you can determine the size of the authorized capital, additional, and also determine the amount of undistributed profit, if any. Additional capital is presented in the balance sheet as an indicator of additional capital.

Analyzing the presentation of equity in the balance sheet, it can be noted that equity in the balance sheet line “Reserve capital” shows the amount of undistributed profit, which is intended for targeted expenses. This is due to the fact that inventories of this kind must be created at the enterprise. Their purpose varies according to the nature of their use. It can be noted that funds of this kind are used to renew fixed capital. The amount of these funds is established by the management of the organization, and it also determines the purposes of its expenditure and purpose.

Analyze equity capital according to various criteria and parameters. For example, to consider financial stability, an analysis of the proportion of debt and equity in the capital structure of an organization is often carried out. In the analysis, an important basic criterion is that the greater the amount of borrowed funds in this capital structure, the correspondingly lower the level of financial stability of the enterprise. And, conversely, the more equity capital, funds, assets, the more financially stable the company is in the market and the less financially dependent.

In order for the proportion of capital to be optimal, a combination of debt and equity capital is needed that would ensure maximum market valuation of the total capital. Analysis and search for such a proportion is a question and problem of capital structure. The theory is based on a comparison of the costs of these two types of capital and, ultimately, the search for some combined options. In the process of analysis and consideration, of course, the main document used is balance sheet enterprises. In order to analyze the capital of an organization, it is necessary to analyze the liabilities of the balance sheet according to its structure and relationships with the total amount of liabilities.

Significant integral part equity capital is the authorized capital. It forms an integral part of it. It is often used to analyze the financial condition of an enterprise. In particular, it is used to analyze the business activity of an enterprise. In its meaning, the size of the authorized capital determines minimum size property, which is a guarantee of satisfaction of creditors. A feature of the authorized capital is that it can be formatted into a mutual fund, authorized capital, and also into share capital. If the amount of the authorized capital changes, then changes are made to the statutory documents of the enterprise.

Another significant part of equity capital is additional capital. It can be called, to some extent, added capital, or additional. The explanation for the appearance of additional capital is the fact that the size of the authorized capital must reflect exactly the initial amount of capital, which is shown in the charter of the enterprise. To reflect changes in the amount of capital, additional capital was needed, which characterizes and reflects changes in this aspect. If this requirement did not exist, then, in essence, all changes would be shown and reflected in the authorized capital of the enterprise.

Thus, an important indicator that indicates financial condition the enterprise and its level of development, the place it occupies in the market is the capital with which it is provided. Or it can be called the enterprise’s own capital, its own property base. However, in addition to your own resources, you often have to use borrowed funds. An important point is the cost, the costs associated with the participation of borrowed capital. If the necessary requirements and conditions are met, even with the participation of borrowed capital, the enterprise will be financially stable and independent of foreign capital.

The capital of an enterprise is the totality of funds that an enterprise can dispose of to carry out its activities with practical purpose making a profit.

According to the source of formation of assets, own and Main role in this case, it is the own part of the assets that plays a role, ensuring the economic independence of the organization.

The equity capital of an enterprise reflects the total value of funds owned by the enterprise and free for use in the formation of part of the assets. The equity portion of the total capital represents the net assets of a firm or organization.

The equity capital of an enterprise includes various sources of resources: authorized, reserve. In addition, it includes retained earnings, separate special-purpose funds and other reserves. In addition, this includes all gratuitous income and subsidies allocated by the state.

The amount is prescribed in the charter and other constituent documents legal entity. Additional is all the property contributed by the founders in excess of the charter, as well as the amounts remaining as a result of the revaluation of property, and other income. The reserve is allocated from profit to cover possible losses and damages.

The main source of savings is retained earnings, which remains from the gross profit after paying taxes to the budget and deductions for other requirements.

Special purpose funds represent net profit, which is used for enterprise expansion, production development, and social activities.

Other reserves mean reserves created in connection with expected large expenses, which are included in the cost price, as well as all distribution costs.

The equity capital of an enterprise is divided into two key components - invested and accumulated capital.

The invested part is the funds invested by the founders (owners) in the enterprise. It includes shares (common and preferred) and additionally paid assets. This also includes those received free of charge from various sources values.

In the balance sheet, part of the invested funds is reflected as authorized capital, part - as additional (received share premium), part - as additional (property received or transferred free of charge) or a social fund.

The accumulated part is funds created in excess of those originally advanced by the owners. This part is reflected in the items arising during the distribution of net profit (these are retained earnings, reserve capital, and other similar items).

The company's own capital has the following positive features:

• ease of involvement (depends on the owners and does not require approvals from other business entities);
• high possibilities for generating profit (does not require interest payments);
• ensuring the financial stability of the organization in the long term and reducing the risk of bankruptcy).

However, it also has disadvantages:

• limited volume of fundraising;
• high price compared to borrowed sources;
• the unexploited possibility of increasing profitability through borrowed funds.

In general, an enterprise that uses exclusively its own capital is the most financially stable, but the pace of its development is hampered due to the failure to take advantage of opportunities to increase profits on funds invested in the enterprise’s fixed capital.

Equity capital is the total amount of the organization that was formed on the basis of the authorized, reserve and additional capital.

This composition can include retained earnings and other income of the enterprise.

Own capital plays a very important role in the activities of an enterprise. If the company has its own savings, then it is considered independent from external sources.

The activity will be more efficient and most likely this will contribute to the development of a healthy and successful business.

Return on equity on balance sheet

It’s good when the enterprise has its own capital, which can be used to implement the company’s work, but it is better if profitability is at high level.

So, to correctly calculate return on equity, it is necessary to divide net profit by the average annual capital.

The return on invested capital ratio on the balance sheet is calculated as the organization's net profit divided by the average annual total capital.

Before you begin calculating return on equity, you must use quarterly or annual reporting.

A detailed assessment of profitability will allow you to maximize the assessment of production bottlenecks, avoid unnecessary costs and increase profits.

Calculation of equity on the balance sheet

To properly formulate a business plan, you must use the best professional quality workers. Based on this report, you can determine the amount of equity capital.

To determine the efficiency of using a company's assets, it is necessary to compare data for several periods. As the practice of forming shows financial statements- this is the best decision.

Equity is calculated after all expenses, taxes, and dividends have been paid. Only after this can you begin to calculate the total amount of equity.

To do this, we will need to add up the equity capital for the previous period, reserve capital, retained earnings, accounts receivable, and only after this is it possible to find out the amount of equity capital.

Own capital of the enterprise

Own capital has about great opportunities in cases where we are talking about a large amount.

With the help of funds you can carry out the following activities:

• Develop enterprise sectors, which are very important, but this moment need investments;
• Purchase new specialized buildings for organizing production processes;
• Attracting new qualified specialists to improve the quality of production or provision of services;
• Rent or purchase new equipment, which will contribute to increasing the production batch of goods and improving the quality of goods;
• Purchasing a new license or patent, which ensures maximum improvement in the operation of the enterprise;
• Increase advertising campaign to obtain maximum profit.

Based on the results, it can be understood that equity capital provides many opportunities in terms of the development of the company.

It is not advisable for money to be in a passive state, especially if it is an enterprise.

In this way, new ways to improve work can be found and this can open up new horizons for development.

Return on equity

According to well-known experts, equity capital must work correctly and for this it is worth:

• Start implementing an idea that has been carefully processed, that is, approved by analysts, financiers, and other interested parties;
• Use only proven methods in your work, since this can only provide maximum effect;
• Work should only be carried out with the participation of trusted suppliers, In such cases, you should not pay attention to the cheapness of their services.

This chain can be continued endlessly, but in turn you need to notice the main aspects that will effectively affect the work process and, in turn, the return on capital.

For constant maintenance To achieve profitability at a high level, it is necessary to pay attention to all indicators, even those that at first glance do not have much impact.

Equity ratio

The share of equity capital in a firm's total capital employed is very important point at work. Available funds help to increase work efficiency.

If borrowed funds predominate, then the company is financially dependent on creditors, which indicates a low asset liquidity ratio. The higher the financial stability indicator, the better for the organization.

To correctly calculate the intrinsic concentration coefficient, it is necessary total amount The assets of the enterprise are divided by the balance sheet currency.

Capital can only be assessed to the maximum using the most accurate methods, which are based on the theories of famous economists.

After the calculations, you should definitely compare them and calculate how you can improve the indicators.

Own working capital

Own working capital is funds that are constantly at the disposal of the organization.

It is used to implement production cycle and paying off debts on expenses.

Equity assets

Capital is one of the most important particles without which the functioning of an enterprise is generally impossible.

It is considered the main factor of activity for both the entrepreneur and the state. Any activity is necessarily supported by a set of material assets that are needed for both the commercial and production functioning of the company.

In the process of work, this concept is formulated as:

• a means that is constantly in circulation, and brings results in the form of profit;
• source of funding for obtaining arrived.

Equity Analysis

The total capital consists of the following parts:

1. Invested capital, which the company receives from investors and with the help of which activities are carried out;
2. Accumulated capital– this is the amount Money, which was obtained on the basis of the continuous activity of the enterprise.

The analysis has the following objectives:

• identification of main sources of financing, from which the direct functioning of the enterprise occurs;
• find out what priority the rights of owners have during the liquidation of the company;
• payment priority level dividends.

Based on the analysis, a future business plan is built, which helps make the right decisions and, of course, increase your own capital.

Cost of equity

The correct determination of equity capital is based on the following factors:

• Initially, you should pay attention to the results of investing capital in activities(this can be seen in the cash flows of a real project);
• determination of the cost of equity capital, which was invested in risky schemes.

After the analysis is carried out at this level, positive and normative results are compared. Based on the results obtained, the future of equity capital is determined.

The cost depends only on what strategy the entrepreneur adopts, since this will show whether it is worth working according to the established schedule.

Own capital accounting

The authorized capital is formed before the enterprise itself, since before opening its activities, this indicator must initially be approved.

The authorized capital is formed on the basis of:

• generated amount, which is confirmed by the cost and number of membership shares;
• the amount of capital approved in the documents, which is necessary for the activity;
• formed and reflected in the balance sheet.

Accounting for the authorized capital is reflected in account 85 of the balance sheet, i.e. in liabilities.

Before you make an important financial decision, you need to properly consider financial position. Based on the analysis, it is possible to build the correct financial structure for development.

Equity management

Capital in an enterprise is divided into own and borrowed capital. They have a very important influence on the functioning of the company.

Internal sources of financing are considered the most optimal. This can include depreciation, which plays an important role in production.

Borrowed ones include:

• invested facilities;
• loans jar;
• cash from other companies.

You shouldn’t contact them, but sometimes this is the only way to keep the company afloat.

Managing capital is not easy, but it is still possible. To do this, you need to correctly distribute priorities.

It is necessary to attract the best economists if financial resources allow. It is definitely worth paying attention to the process of distributing funds between the company’s sectors.

Own capital is an instrument of activity that can be used to achieve any production and non-production goals.

The balance sheet is one of the main sources of information about net worth.

Based on this document, financial decisions are made at the enterprise. It is in this way that a new plan for improving performance can be developed.

Sources of equity capital

The capital of the enterprise is formed on the basis of internal and external sources of financing

Internal sources are based on the successful activities of the organization - this is the profit of the enterprise, depreciation deductions, sale and rental of idle assets of the enterprise.

If a company has the ability to repay all its losses from internal sources, then it has high competitive advantages, which is very important for any entrepreneur

External sources should include contributions from the founders, without which the activity of the enterprise is impossible.

Own capital structure

The property of the enterprise is formed on the basis of:

1. fixed assets enterprises;
2. unfinished long-term investments;
3. intangible assets;
4. financial investments;
5. material and production stocks;
6. monetary funds;
7. financial investments.

Each company builds its business based on financial capabilities and potential. Based on this, the company determines the necessary sources of financing.

Equity valuation

The capital of an enterprise plays the role of an important accounting object. This indicator assessed during formation general characteristics activities of the enterprise.

The success of an organization's activities is determined by conducting financial and management accounting. Using special techniques, you can find out the amount and capabilities of your own capital.

Today there are very few companies that have a sufficient amount of equity capital, as changes are constantly taking place in the global economy and in the country's politics.

Based on these factors, enterprises do not have time to adapt. Therefore, borrowed funds are required.

Own capital determines:

• success of activities;
• investment efficiency Money;
• amount of increase property.

Calculation of net worth

The amount of equity capital is calculated based on the generated data in accounting. As previously stated in the article, this indicator can only be determined on the basis of the balance sheet data provided at the end of the reporting period.

Equity can only be assessed after all taxes have been paid and debt obligations have been repaid.

Only on the basis of this procedure can we proceed to determining equity capital.

Formation of own capital

The main goal of capital formation is to attract investment to implement the production cycle.

The initial stage of capital formation is the definition required quantity investments for the implementation of the project. It is impossible to allow investments to be insufficient, because this may not bring results and may not cover losses.

Excess investment should also not be allowed, because you will have to pay interest on it, in other words, it is an unnecessary expense.

Maneuverability of equity capital

This coefficient shows how much of your own funds is in circulation and based on this, you can find out how much of your funds are in free movement.

The coefficient must be high enough for the enterprise to function normally.

It is quite difficult for many organizations to achieve this indicator at a high level. To achieve the maximum result, it is necessary to carefully calculate all known financial transactions in order to avoid costs.

Increase in equity

At an enterprise, such decisions are made by managers. Reasons may be different situations. And starting from this, you can begin to increase it.

There are ways:

• Increase the authorized capital founders;
• Selling or renting property(industrial building and equipment);
• Use of the profit received for the past period.
• Depreciation equipment.

You can also apply other possible ways to increase your equity capital.

Equity turnover

The company's funds must be in constant motion, as this helps to increase profits. A passive state indicates poor organization of work and a decrease in profits.

In order to speed up the turnover process, it is necessary to make adjustments to the production process itself - you can purchase new equipment and start producing a new product.

If the company provides services, then you can apply new technology provision.

In any case, it is impossible for capital to stagnate - nothing happens from such a phenomenon, except that the enterprise loses the opportunity to make a profit.

Equity audit

Any company conducts an audit, which helps to monitor the activities of managers as much as possible.

You need to pay attention to the following:

• term and amount of payments dividends;
• exact distribution arrived;
• timely payment taxes;
• legality of financial transactions;
• availability of all documentation and financial transactions at the enterprise;
• accountants' mistakes and economists.

Change in equity

Measures to change the indicator are taken by the manager and founders of the company. You should definitely adhere to all the rules, both economic and political.

Basically, the indicator changes due to the expansion of the product range. Sometimes equity changes due to a crisis. The founders want to save their money and reduce production.

Based on his own capital, the entrepreneur receives maximum profit and this contributes to the production development of the enterprise.

Correctly distributing this indicator will require a lot of time and qualified workers.

Capital is influenced by many factors that can either increase or decrease it. The presence of own capital allows the company to develop as much as possible.