Let's have a look at some common line items in the equity section of the balance sheet Here we've got an old equity section from Hershey company And we start at the top with preferred stock and we can see that they don't actually have any preferred stock Well what characteristics does preferred stock have? Well firstly it gets no vote At the annual general meeting they do not get to vote, they are thus not technically owners of the business. They get no say in how the business is run They also receive a fixed dividend, typically a percentage of the value of to stock; the nominal or par value of their stock And it's often treated as debt for valuation purposes. Equity holders we say own the business This is just an obligation of the business Next up we come to common stock and if we look at the Hershey account, we can see Common stock, class B common stock and additional paid in capital Well the common stock and class B common stock will be referred to as par value Let's say these shares were issued for a value of 12, shareholders bought them for 12 Well we would split that down into par value maybe of 1 and then APIC (additional paid in capital) of 11 So the subscription price was 12, less the par value of 1 gives you your APIC of 11 Now while that is a bit of detail, quite interesting to lawyers, not really very useful to many other people Also we notice here that we've got common stock and class B common stock Typically the difference between these will be the voting rights Maybe the first common stock has 10 times the voting power of the class B common stock The next line item we see is retained earnings, this is profits that have been reinvested in the company And then we have treasury stock This represents the value of shares repurchased by the company The company goes out to the market, says to its shareholders "Hey we want to buy some of your shares" and pays them in cash Now the company can't technically own shares in itself (that's impossible) What is does, it buys the shares but instead of ripping up the pieces of paper puts them in a drawer and says we might use them in the future Maybe we'll issue them to management as equity options to incentivise them The next line item for Hershey is accumulated other comprehensive loss, sometimes called OCI or other comprehensive income This represents items that are waiting to hit the income statement So maybe the companies got some financial investments. Maybe those investments went up in value Depending on the type of financial investments; some of those that have gone up in value can hit the income statement immediately and flow through into retained earnings But if it's not that type of financial investment, the increase in the value of the financial investment cannot be booked as a gain yet The company cannot put that gain on its income statement as a gain or income Instead it puts the gain on to its other comprehensive income and it flows through into equity here Why aren't they allowed to book that gain yet? Well because they haven't crystallizedd that gain, they haven't sold the financial investment They haven't actually made that gain and got that cash yet, they're not allowed to book it Last up is non controlling interests in subsidiaries What this means is that Hershey owns a subsidiary It may only own 80% of that but the other 20% is owned by someone else and that is the non-controlling interest They are shareholders in a subsidiary of Hershey So they're not technically shareholders in the Hershey company itself. They're shareholders yes in a subsidiary of Hershey But because Hershey has to consolidate 100% of subsidiary up into its accounts It then says "Oops sorry, consolidated a bit too much there". They then put the extra line item to say The non-controlling interest, they own the other 20%. This is their value