EQ on the BS

[mrb102189]

Apologies for asking a question like this because I can’t remember the exact example, but I believe I was going through a question that asked for CFF, it wanted me to distinguish between an increase in the equity line item on the BS, VS the equity line item on the statement of changes in owner’s EQ. I believe I have this understood but can you confirm I am correct in this:
-if common EQ goes up on the BS, that reps the market value of all common EQ
-if common EQ goes up on the statement of changesin EQ, that represents paid in capital to a positive CFF
So, you can’t get the CFF from changes in the BS line item, right?
Thanks!

 

[Ron Swanson]

The statement of stockholders equity should mirror the changes on the balance sheet.
also the balance sheet represents a cost basis, there will not be any adjustments for the market value of equity.
if your looking at the common equity component of the CFF you want to looking at additional stock issued (shares and additional paid in capital) the stock repurchases (treasury stock) and dividends paid out (increase in retained earnings less net income)
hope that helps

 

[Abh]

In case Equity changes on account of bonus issue (stock dividend), then there would be no changes in CFF as there is no exchange of cash.
The amount of increase would be counter-balanced by decrease in Reserves and Surplus.
So in that case you r right, CFF would not change.