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Common Equity

Common Equity is one of the two divisions on the Liability side of the Balance Sheet. Comprised of the Company’s Common Stock at par value, Capital Surplus and Retained Earnings.

Common Equity or Shareholders Funds, has various entries and is one of the two components on the Liability Side of the Balance Sheet. Common Equity is junior to a Company’s Debts and other Creditors. In the Financial Sector, Common Equity is divided into Tier 1 and Tier 2 Capital for Solvency purposes. Shareholders’ Funds will be used in the calculation of a Company’s leverage. If a Company has a Leverage of 1.2X, the Debt of the Company is 20% greater than the Common Equity of a Company. In real numbers, if Common Equity is $200 million, at 1.2X, the Debt would be equal to $240 million.

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Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: wwBLOG@smartest-data.blog or Telegram +393339034488

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