Total Common Equity

Category

Balance Sheet

Units

Currency

Formula

Total Stockholders' Equity (attributable to parent) − Preferred Equity

US-GAAP elements

StockholdersEquityPreferredStockValue

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Total common equity is the portion of a company's shareholders' equity that belongs to its common stockholders. It equals the parent company's total stockholders' equity minus the carrying value of any preferred stock, and it includes common stock, additional paid-in capital, retained earnings, and accumulated other comprehensive income, net of treasury stock.

For a company with no preferred stock, total common equity is the same as stockholders' equity attributable to the parent. Common equity is what investors mean by book value when they compare it with market value.

The figure is derived from balance-sheet captions described in Regulation S-X Rules 5-02.28 through 5-02.30, which separate preferred stock, common stock, and the other components of equity. In XBRL, parent equity is tagged StockholdersEquity and nonredeemable preferred stock within it is usually tagged PreferredStockValue. Subtracting the latter from the former gives common equity. Noncontrolling interests are excluded because they belong to outside owners of subsidiaries, and redeemable preferred stock reported in temporary equity is already outside stockholders' equity.

Watch the preferred carrying amount. The balance-sheet value of preferred stock may be its par value, its issue price, or another amount, while its liquidation preference can be higher. Some analysts subtract the liquidation value to be conservative. Common equity can also be negative. Companies with large accumulated buybacks or losses sometimes report a stockholders' deficit, which makes ratios such as return on common equity and price to book meaningless.

Total common equity is the numerator of book value per share and the denominator of return on common equity. Subtracting goodwill and other intangibles gives tangible common equity, and dividing common equity by total assets shows how much of a company's asset base is funded by common shareholders. Because it is an accounting figure, common equity reflects historical costs rather than the market value of the company's assets.