Small business owners must deal with numerous accounting reports to monitor their business’s finances and ensure its financial health. Profit and loss statements, accounts receivable, aging reports, and cash flow statements are just a few of the essential documents necessary for planning growth and staying on top of money matters. However, some small business owners may overlook the statement of shareholders’ equity ― part of the balance sheet ― while focusing on money coming into and leaving the organization. That said, income shouldn’t be your only focus if you want a genuine idea of how your operations are faring.
We’ll explain more about the statement of shareholders’ equity and how it fits into your business’s overall financial picture.
What is a statement of shareholders’ equity?
A statement of shareholders’ equity, also called a “statement of stockholders’ equity” or a “statement of owners’ equity,” is a section of a business’s balance sheet that lists the difference between total business assets and total liabilities. It gives shareholders, investors, and the company’s owner a true picture of how the business is performing and is usually measured monthly, quarterly, or annually.
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