Changes in equity and dividends in cash flow
Could you please explain in detail as to why we substracted net income after substracting last year equity from this years equity? is it because net profit decrease equity? and also wat if there is a dividend pay out will we add it back to the equity?
1 answers ( 0 marked as helpful)
Hi Maria,
Good to hear from you!
Please consider the following formula:
2024 Equity = 2023 Equity +/- 2024 Net income - 2024 Dividends
As you can see we need to add net income from current year to previous year in order to obtain the new equity amount. Hope this makes sense!
Best,
Ned