Equity Section Analysis: Fundamentals of Business Finance Report

This report analyzes the equity section of a balance sheet, focusing on the importance of items such as retained earnings, treasury stock, and common stock. It examines how investors analyze the retained earnings to understand how wisely the company invests stakeholder's money. The report also discusses treasury stock and its impact on shareholder holdings, along with accounting methods for treasury stocks. Furthermore, it highlights the significance of paid-up capital and the vision of Saudi Arabia for the financial sector's development. The report references the work of Mustafa Sayim and Fatimah Alsakhen, providing diverse perspectives on the equity section and its implications for financial analysis and investment decisions. The report also highlights how the equity section of a balance sheet is important from the investor's point of view.

Running head: 25300 FUNDAMENTALS OF BUSINESS FINANCE
25300 Fundamentals of Business Finance
Name of the Student:
Name of the University:
Author Note

25300 FUNDAMENTALS OF BUSINESS FINANCE
Table of Contents
Importance of equity section of the balance sheet as per Mustafa Sayim..................................3
The equity section of the balance sheet as per Fatimah Alsakhen.............................................3

25300 FUNDAMENTALS OF BUSINESS FINANCE
Importance of equity section of the balance sheet as per Mustafa Sayim
According to Mustafa Sayim’s, there are various accounts in the equity section of the balance
sheet. He says that the retained earnings show the way the management is using the equity
(Pinto, 2020). He has asked for the applications of the equity investment for Saudi Arabia and
Saudi Vision 2030. There is a good impact of this on the economy of the country. The vision
of Saudi Arabia for the development of the financial sector of the country for the year 2030 is
that it will diversify this sector to develop the economy of the country. The country has an
aim to establish its private industry so that the equity or the capital market has an advanced
formation.
The equity section of the balance sheet as per Fatimah Alsakhen
Fatimah Alsakhen has said that the equity section of the balance sheet says about the
investment of the shareholders of the company. At times of liquidation, the firm is payable to
its preference shareholders before it pays to any other shareholder (Ross, Ross & Ross,
2019). This statement is correct as companies that are facing liquidation are liable to pay a
dividend to its preference shareholders. The other shareholders of the company receive the
amount of net income that is left over. He has said that considering the equity is the
subtraction of the total liabilities from the total assets of a company. He said that the investors
of a company must give importance to the retained earnings and the paid-up capital of the
company, which is true.
Reference
Pinto, J. E. (2020). Equity asset valuation. John Wiley & Sons.
Ross, C. P., Ross, L., & Ross, S. Y. (2019). Common Stock Returns Are Not Equity
Returns. Available at SSRN 3359251.