Changes in shareholder equity can impact a company's performance and market value. Shareholder equity represents the total value of assets owned by shareholders and is calculated by subtracting total liabilities from total assets. An increase in shareholder equity is generally positive as it may result from reduced debt, increased assets or profits. However, the specific reasons for changes are important to understand. Shareholders play important roles in company financing, governance, and control. National Bank of Pakistan is a major Pakistani bank with a goal to enhance profitability and maximize shareholder value.

2.  Maria javed
 Mba IT

3. Topic
Affect of changes in
shareholder
equity

4. Main headings:
 Introduction to the topic
 Important sub-topics
 Practical study of the organization
 Swot analysis
 Conclusion
 recommendation

5. Definition of Shareholders
Equity
 Shareholders equity is the difference
between total assets and total liabilities.
It is also the Share capital retained in the
company in addition to the retained
earnings minus the treasury shares.
Shareholders equity is the amount that
shows how the company has been
financed with the help of common shares
and preferred shares. Shareholders
equity is also called Share
Capital, Stockholder’s Equity or Net

6. The Importance of Shareholders
in Business
 Shareholders are the owners of
companies. A small business may
have just one shareholder, the
founder, while a public company may
have thousands of individual and
institutional shareholders, such as
mutual fund companies, pension funds
and hedge funds. Shareholders play
an important role in the
financing, operations, governance and
control aspects of a businesses.

7. Cont……..
Financing:
 One of the primary reasons for going
public is to raise funds from investors.
In return, the company's founders give
up part ownership to these new
investors. Private companies and
startups may also raise funds through
private placements, which are share
issues to a select group of individuals
and institutions

8. Operations:
 Shareholders play both direct and
indirect roles in a company's
operations. They select directors who
appoint and supervise senior
officers, including the chief executive
officer and the chief financial officer.
They play an indirect role through the
stock market.

9. Governance:
 Public companies usually have formal
corporate governance policies, such
as the composition and roles of
different board committees, the role of
the chairman, codes of conduct and
business ethics. Boards of directors
answer to shareholders, not to
management. Public companies must
provide timely and complete
disclosures to shareholders

10. Control:
 Shareholders usually determine who
controls a public company. A widely
held company, in which there is not a
single majority shareholder, is
vulnerable to hostile takeover
attempts. Shareholders can block
such moves if they are satisfied with
the current management or if they
believe the offering price is insufficient

11. Components of a Statement of
Shareholders' Equity
 There are six common categories included on
a statement of shareholders' equity.
 Preferred Stock
Preferred stock is a class of stock whose
holders receive dividends from profits before
common stockholders do. In the case of a
company's going out of business, preferred
stockholders are given priority in claiming
assets

12.  Common Stock
Common stock is all stock other than
preferred stock. Common stockholders
are given voting power in shareholder
election.
 Additional Paid-In Capital
Additional paid-in capital is the amount
paid in excess of the par value of both
preferred and common stock. For
example, if the par value of a stock is
$100 but was purchased by investors by
$110, $100 would be recorded under a
stock account, and $10 would be

13.  Retained Earnings
Retained earnings are the amounts that a
business earns that have not been
distributed as dividends. Retained earnings
are often held so a business can reinvest in
its development or pay debt. Retained
earnings is a summary of the changes in net
income.
Accumulated Other Comprehensive
Income: is the amount of no owner changes
in equity that occur other than net income.
Unrealized gains or losses on investments
are examples of items that fall under this
category.

14. Treasury Stock:
◦ Treasury stock is stock that a business issues
to investors and then repurchases. A business
could purchase back stock to sell or give to
employees or to adjust the market price of the
company's stock.

15. Practical study of the
organization
 NATIONAL BANK OF PAKISTAN

16. History
 National bank of Pakistan (NBP) was
developed in 1949. It served as the central
regulatory bank of Pakistan till the time State
Bank of Pakistan was established in 1949.
National bank of Pakistan is the complete
government bank and it undertook
government treasury operations. The two
major competitors of national bank of
Pakistan are united bank limited (UBL) and
Habib bank of Pakistan. The first branch was
open in I.I Chandigarh road Karachi. And
after, they make it the head office of the bank

17. Mission:
 Institutionalizing a merit and performance
based culture
 Creating a distinctive brand identity by
providing the highest standards
 of services
 Adopting the best international management
practices
 Maximizing stakeholders value
 Discharging our responsibility as a good
corporate citizen of Pakistan and in countries
where we operate

18. VISION
To be recognized as a leader and a
brand synonymous with trust, highest
standards of service
quality, international best
practices and social responsibility.

19. GOAL:
 To enhance profitability and
maximization of NBP share through
increasing leverage of existing
customers base and diversified range
of products

20. The Effects of Change in
Shareholder Equity
 The total assets minus liabilities in a
corporation -- as only incorporated
companies have shareholders -- is
called shareholder equity. Shareholder
equity represents the amount of value in
a company that shareholders, as
owners, collectively own. Any change in
company assets or liabilities affects
shareholder equity.

21. Equity versus Market Value
 Equity is not market value. Shares --
which are tiny fractions of ownership in a
company -- are traded on secondary
markets, where a market price per share
constantly fluctuates in accordance with
investor expectations about the future of
the company. Equity reflects measurable
value based on the company's current
holdings, debts and activities.

22. Effects
 Equity does not directly affect or cause anything.
Changes in equity can affect the market price of
shares and investor sentiment, but the underlying
causes of the change are more important.
However, if a company is liquidated, shareholder
equity represents what shareholders receive, if
anything.
 Changes:
 Generally, an increase in shareholder equity is a
positive change and may cause the market value
of shares to increase. Increases mean that either
debt and other liabilities have decreased or
assets and profits have increased, both of which
investors like to see happen and markets see as
favorable developments.

23. Factors
 The underlying cause of an increase or a
decrease is more important than the
change itself and may have a larger
effect. An increase in shareholder equity
due to an increase in accounts
receivable could signal problems in
collections, whereas an increase due to
high returns on investments means more
cash to shareholders and is positive.
Similarly, a decrease due to increased
debt for a capital expansion or hot
acquisition may be read as positive
because it signals future
growth, whereas a decrease due to

24. Swot analysis
 Strength:
Limited liability of stockholders
Transferability of shares
Continued life existence
Greater source of funds
Centralized management

25. Weaknesses:
Complicated information and
operation
Greater degree of government control
and supervision
Weakened credit standing
Heavier income tax

26. Opportunities:
 The growing market
 Earn good income
 Build the business over the year

27. Threats:
Dispute between shareholder, director
and business partner
Poor integration
Target company stock

28. Conclusion:
 Shareholder's equity is the portion of a
company owned by the shareholders. It
is calculated by subtracting liabilities
from assets. Shareholders are the
owners of companies. , while a public
company may have thousands of
individual and institutional
shareholders, such as mutual fund
companies, pension funds and hedge
funds. Shareholders play an important
role in the
financing, operations, governance and
control aspects of a businesses.

29. Recommendation:
 Understand from the company’s broker
what demand is like for the shares so
that buyers can quickly be found for the
activist’s holding when/if it decides to sell
up.
 Spend time educating shareholders on
the business and its strategy, focusing
on long- term value or, in the case of
high yielding stocks, income return.
 Be prepared to act and react in a variety
of scenarios according to a solid
strategy. Do not give emotional or hostile
quotes to the media.