Dear All:

REO= NI/Equity

Is the Equity = Retainied earnings or total Equity in the balance sheet?


RE is a component of equity. RE + capital stock + additional paid in capital - treasury stock will = equity (assuming no pf or odd shares). Assets - liabilities = OE which will include RE

By the way. Are you a level II or level I candidate? This is a level I topic.

This is a first year accounting topic.

Equity=Shareholder’s Equity