How to use the equity roll-forward statement builder
- Enter the opening balances of share capital, retained earnings and other equity.
- Enter net income for the period (a loss as a negative number) and the dividends declared.
- Enter shares issued, shares bought back and any other change in equity.
- Optionally enter total equity from the balance sheet in the advanced options to check that the roll-forward ties.
Formula
Share capital = opening + shares issued - shares bought back
Retained earnings = opening + net income - dividends declared
Other equity = opening + other change. Total equity = the three added together
The check compares the total with the balance sheet. A difference means a movement is missing or has the wrong sign.
A year with profit, a dividend and a share issue
The opening balances are $500,000 of share capital, $420,000 of retained earnings and $15,000 of other equity, $935,000 in all. Net income of $135,000 and dividends of $40,000 take retained earnings to $515,000. Shares issued of $60,000 take share capital to $560,000, and a $5,000 other change takes other equity to $20,000.
Total equity is $560,000 + $515,000 + $20,000 = $1,095,000, which ties to the balance sheet figure entered. If the balance sheet said $1,250,000, the page would report that the roll-forward is off by $155,000. A loss of $45,000 instead of a profit shows as ($45,000.00) in the movements table.
What a roll-forward shows
A roll-forward starts with the balance at the beginning of a period, adds and subtracts each movement and arrives at the balance at the end. For equity the movements are the profit or loss for the year, distributions to owners, money raised from owners and any items taken straight to equity. Presenting them by account shows which part of equity each event changed.
The page gives two views: by account, with the opening, the change and the closing balance, and by movement, which lists each event in the order owners usually read them.
Finding a difference
When the total does not tie, check the signs first. Dividends and buybacks reduce equity, so enter them as positive amounts and the tool subtracts them. Then check whether a movement was taken to another account, such as a revaluation. The Debt to Equity Ratio Calculator uses the closing figure, and the Equity Method Investment Calculator rolls forward an investment in another company in the same way. To see how issuing shares changes ownership, use the Equity Dilution Calculator, and to record the dividends and issues, the Journal Entry Generator.
Assumptions and limits
- Three accounts are shown. Real statements may have more columns, such as treasury stock or non-controlling interests.
- Dividends are entered as declared and are taken out of retained earnings.
- Account names depend on your accounting framework and your legal form.
- The figures shown are examples. Amounts in parentheses are negative.
Frequently asked questions
Why enter dividends as a positive number?
The tool knows dividends reduce retained earnings and subtracts them. Entering a negative number would add them back.
What goes in the other change?
Items that go straight to equity, such as currency translation or revaluation. Enter a decrease as a negative number.
Is the balance sheet field required?
No. Leave it blank and the page just reports the closing total without a check.
Can I use it for a partnership or a sole proprietor?
Yes, with the owners' capital in share capital and the drawings in dividends, though the account names will differ.