STATEMENT OF CHANGES IN EQUITY

ACCOUNTING FOR
MANAGERS
(MBA2035)
Assignment-1

Submitted by:-
TRISHLA KRISHNA
20222MBA0078

Submitted to:-
Prof.Magesh Kumar Sir

PRESIDENCY UNIVERSITY
SCHOOL OF MANAGEMENT
Purpose of this article:
The statement of changes in equity, also known as the statement of retained earnings, is
a financial statement that shows the changes in a company's equity over a period of time.
It breaks down the changes in equity into several components, including net income or
loss, dividends paid, and other transactions that affect equity. The statement is useful for
investors and analysts to understand the sources and uses of a company's equity, and to
assess its financial performance and stability over time.

My Findings:
The statement of changes in equity can reveal a number of different things about a
company's financial performance and stability. Some key findings that can be gleaned
from the statement include:

Net income or loss: The statement shows the company's net income or loss for the
period, which can indicate whether the company is making a profit or a loss.

Dividends paid: The statement shows the dividends paid to shareholders during the
period, which can indicate the company's ability to generate cash flow and its willingness
to return some of that cash to shareholders.

Capital contributions: The statement shows any capital contributions made by

shareholders during the period, which can indicate the company's ability to raise capital
through equity financing.

Changes in reserves: The statement shows any changes in reserves such as revaluation
reserve, which can indicate changes in the value of assets held by the company

Other transactions: The statement shows any other transactions that affect equity, such
as stock buybacks or the issuance of new shares.

Overall, the statement of changes in equity provides insight into how a company's equity
has changed over time, and can be useful for assessing the company's financial
performance and stability.

Introduction:

What is statement of changes in Equity?

The statement of changes in equity, also known as the statement of retained earnings, is
a financial statement that shows the changes in a company's equity over a period of time.
It is one of the primary financial statements used to assess a company's financial
performance and stability. The statement is typically used in conjunction with the balance
sheet and income statement to give a complete picture of a company's financial position.
The statement of changes in equity breaks down the changes in equity into several
components, including net income or loss, dividends paid, and other transactions that
affect equity. It provides a detailed account of the changes in equity during the period, and
shows how these changes have affected the company's overall financial position.

The statement of changes in equity is an important document for investors and analysts,
as it provides insight into the soþurces and uses of a company's equity. It can be used to
assess the company's ability to generate profits and cash flow, as well as its ability to
raise capital through equity financing. Additionally, it can provide insight into the
company's dividend policy and its ability to retain earnings.

Overall, the statement of changes in equity is an important financial statement that

provides a comprehensive view of a company's equity over a period of time, and can be
used to assess the company's financial performance and stability.

Benefits of Statement of changes in Equity:

● provides several benefits for investors and analysts assessing a company's financial
performance and stability. Some of these benefits include:
● Understanding sources and uses of equity: The statement shows the various
components that have contributed to changes in equity, such as net income or loss,
dividends paid, and other transactions, which helps to understand how the company's
equity has changed over time and what are the sources and uses of equity.
● Assessing profitability: The statement shows the company's net income or loss for
the period, which can indicate whether the company is making a profit or a loss. This
helps investors and analysts to assess the company's profitability over time.
● Evaluating cash flow: The statement shows dividends paid to shareholders during
the period, which can indicate the company's ability to generate cash flow and its
willingness to return some of that cash to shareholders.
● Assessing capital raising ability: The statement shows any capital contributions
made by shareholders during the period, which can indicate the company's ability to
raise capital through equity financing.
● Assessing reserves changes: The statement shows any changes in reserves such
as revaluation reserve, which can indicate changes in the value of assets held by the
company.
● Analyzing other transactions: The statement shows any other transactions that
affect equity, such as stock buybacks or the issuance of new shares, which can
indicate the company's financial position and strategy.
● Overall, the statement of changes in equity provides a detailed picture of a company's
equity over a period of time, and can be used to assess the company's financial
performance and stability. It can be used in conjunction with the balance sheet and
income statement to give a complete picture of a company's financial position.
CONCLUSION:
In conclusion, the statement of changes in equity, also known as the statement of retained
earnings, is an important financial statement that provides a comprehensive view of a
company's equity over a period of time. It breaks down the changes in equity into several
components, including net income or loss, dividends paid, and other transactions that
affect equity. The statement is useful for investors and analysts to understand the sources
and uses of a company's equity, and to assess its financial performance and stability over
time. It can be used in conjunction with other financial statements like the balance sheet
and income statement to give a complete picture of a company's financial position. The
statement of changes in equity is a valuable tool for assessing a company's profitability,
cash flow, ability to raise capital, and overall financial stability.