Common stock is reported in the stockholder's equity section of a company's balance sheet.
A balance sheet is a financial statement that shows the assets, liabilities and equity of a company. A balance sheet is one of the three main financial statements used to value a company. Provides a snapshot of the company's financial position (what you own and what you owe) as of the date of publication.
A strong balance sheet utilizes an optimal level of working capital (current assets minus current liabilities) to fund the company's core business, with the ultimate goal of increasing earnings and subsequent profit. Understanding what this optimal level is is important for businesses.
Company creditors can take over the company, leaving shareholders with nothing. To spot such companies, look at their debt to equity ratio. Above 50%, the debtor owns more assets in the company than the shareholders.
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