Equity

The Equity decision screen is used to issue or repurchase shares (equity) in your firm.

Your Book Equity is the value of the equity in your firm according to your balance sheet, i.e. share capital plus retained earnings. This is the difference between the book value of your assets and your liabilities.

Your Market Equity is the market value of your currently issued shares, e.g. if you have 1 million shares and a share price of $8, then your market equity is $8m.

Issuing Shares

You can issue shares to raise more capital (cash) by selecting the Issue button and entering the amount of capital you wish to raise. The maximum amount of capital you can raise in a year is 50% of your market equity, so you can increase the number of outstanding shares by up to 50%.

Repurchasing Shares

You can repurchase shares to reduce any excess cash your firm has, by returning those funds to your shareholders. Selecting the repurchase button allows you to enter a dollar value of shares to repurchase, or you can move the slider to the desired position. Note that the maximum value of shares that you can buy back in a year is 25% of your market equity.

To issue or repurchase shares in your firm either move the slider or click in the appropriate white box and enter the desired figure.