# How to Calculate Beginning Stockholder's Equity

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Stockholder's equity shows the stockholders' ownership in a company. If you know a company's beginning and ending stockholder's equity for the year, you can tell whether the company's value is increasing or decreasing, which is a crucial piece of information for making informed investment decisions. To calculate a company's beginning stockholder's equity, you must know the company's ending stockholder's equity, net income (or net loss), value of any preferred stock dividends paid, value of any common stock dividends paid, the foreign currency translation adjustment gain or loss, and the amount of stock issued on the company's statement of stockholder's equity.

## Step 1

Obtain a copy of the company’s statement of stockholder's equity for the time period in question. All publicly traded companies must file their audited financial statements, which includes a statement of stockholder's equity, on both a quarterly (Form 10-Q) and an annual (Form 10-K) basis, with the U.S. Securities and Exchange Commission (SEC). You can use the Next-Generation EDGAR System on the SEC's website to search for a company’s Form 10-K or Form 10-Q SEC filings from as far back as 1994. If you want to know a company's beginning stockholder's equity from just a quarterly period, search for the company's Form 10-Q; if you want to know a company's beginning stockholder's equity for a year-long period, search for the company's Form 10-K.

## Step 2

Find the company's ending stockholder's equity, net income (or net loss), value of any preferred stock dividends paid, value of any common stock dividends paid, foreign currency translation adjustment gain or loss, and amount of stock issued on the company's statement of stockholder's equity for the time period in question. All these amounts are listed as separate line items on the company's statement of stockholder's equity. For example, assume that in Year Y, Company X had an ending stockholder's equity of \$350,000, a net income of \$50,000, paid \$300 in preferred stock dividends, paid \$19,000 in common stock dividends, issued \$8,500 in common stock, and had a foreign currency translation adjustment gain of \$1,700.

## Step 3

Subtract the net income from the ending stockholder's equity. For example, subtract \$50,000 from \$350,000 to get \$300,000.

## Step 4

Add the value of any preferred stock dividends paid out and the value of any common stock dividends paid out to the result. These two amounts are listed as line items on the company's statement of stockholder's equity. For example, add \$300, \$19,000 and \$300,000 to get \$319,300.

## Step 5

Subtract the amount of common stock the company issued (this amount is included as a line item on the company's statement of stockholder's equity) from the result. For example, subtract \$8,500 from \$319,300 to get \$310,800.

## Step 6

Subtract any foreign currency translation adjustment gains (this amount is listed as a line item on the company's statement of stockholder's equity) to the result to get the beginning amount of stockholder's equity. Or, if there is a currency translation adjustment loss (this amount is listed as a line item on the company's statement of stockholder's equity), add the loss to the result to get the beginning amount of stockholder's equity. For example, subtract \$1,700 from \$310,800 to get \$309,100.