What is the purpose of the statement of shareholders' equity?

The statement of shareholders' equity serves to illustrate the changes in ownership interest within a company over a specific reporting period. This document details how equity accounts have adjusted due to various factors such as net income, dividends paid, issuance of new shares, and repurchases of existing shares. These changes reflect the company's performance and decisions made regarding profits and capital management, allowing stakeholders to understand how these actions impact the equity held by shareholders.

The statement typically includes components such as retained earnings, additional paid-in capital, treasury stock, and other comprehensive income, providing a comprehensive picture of what has occurred in equity accounts throughout the reporting period. By examining this statement, investors and analysts can gauge the overall health of the company’s financial standing in relation to its shareholders.