Equity capital is a certain set of financial resources of the enterprise, which are formed at the expense of the founders of the company, as well as the financial results of its own activities. In turn, in any joint stock company, equity is called joint stock.
Instructions
Step 1
The capital that belongs to the owner of the company, in the conditions of a joint-stock company, can be calculated as the difference between the total assets of the company and its liabilities.
Step 2
In determining the carrying or book value of a company's equity capital, all of its assets and liabilities on its balance sheet are taken into account at their cost in origin. In this case, equity is calculated as the difference between the carrying amount of all assets and liabilities. This method of calculation is suitable only when the market and book values of assets and liabilities do not differ greatly among themselves. If the market value deviates significantly from the basic book value, then the specified calculation method will distort the results, as well as inadequate estimates of the firm's equity capital.
Step 3
Another way of calculating equity capital is to calculate its value according to the rules and requirements that are established by the bodies exercising supervision, as well as control over the activities of the organization. In this case, equity is calculated as the sum of a number of its constituent elements. At the same time, there are different ways of calculating equity capital depending on the type of organization (for example, in banks and industrial enterprises).
Step 4
The algorithm for calculating the size of the bank's own (regulatory) capital is as follows: RVK = OK + DC-V, where RVK is the amount of the bank's regulatory equity capital;
OK - the value of the fixed capital, reduced by the sum of all under-formed reserves for the existing active operations of the bank;
DC is an indicator of the bank's additional capital;
B is prevention.
Step 5
When calculating the total amount of the value of own regulatory capital, the additional capital should in no case exceed the value of the fixed capital. At the same time, the inclusion of a certain, existing debt in the calculation of equity capital is practically limited to 50% of the amount of fixed capital.
