Calculating Additional Investment in Stockholders' Equity: A Comprehensive Guide

A company receives additional investment money by selling stock to investors.

A company's stockholders' equity is the amount of investors' stake in the company. Stockholders' equity consists of the investment from stockholders and retained earnings, which are the company's profits that it hasn't paid out as dividends. The total investment from stockholders is called total paid-in capital, or total contributed capital. When a company receives additional investments by selling stock to stockholders, it increases total paid-in capital on its balance sheet, which increases its stockholders' equity. You can calculate this change to determine the additional money a company has received.

Step 1

Obtain a company's balance sheets for two consecutive accounting periods from its 10-Q quarterly filings or from its 10-K annual filings. You can get these filings from the U.S. Securities and Exchange Commission's EDGAR online database or from the investor relations section of the company's website.

Step 2

Find the amount of the company's total paid-in capital, listed in the Stockholders' Equity section of the most recent balance sheet. For example, assume the company's most recent balance sheet shows $500,000 in total paid-in capital.

Step 3

Identify the amount of total paid-in capital, listed on the previous period's balance sheet. In this example, assume the previous period's balance sheet shows $400,000 in total paid-in capital.

Step 4

Subtract the previous period's total paid-in capital from the most recent period's total paid-in capital to calculate the additional investment from stockholders. In this example, subtract $400,000 from $500,000 to get $100,000 in additional investment.

Tip

Monitor a company’s additional investments that it receives from stockholders. Additional investments can help a company grow, but can also dilute your investment in the company, resulting in a smaller ownership percentage.