What exactly is common equity? What are the factors that can cause an increase or decrease of common equity? When there is an Increase in Net Income, does it make its way thru RE and thus increases common equity? I’m kinda confused, i know CE is the shareholders balance account, but i dont know how it will rise and what affects that account. Thx for any input
common equity is equity available to COMMON shareholders… so remember to take out any preferred stock/dividends
So does C.E. account increase when overall returns for common shareholders increase?
Yes, that’s right. If there is no preferred equity, then all of shareholder equity is common equity. If there are preferred shares, subtract them from shareholder equity to get common equity.
If you don’t know common equity at this stage of the game…