Statement of shareholders’ equity: reading Apple’s equity roll-forward

The statement of shareholders' equity (also called the statement of stockholders' equity or of changes in equity) explains how the owners' stake on the balance sheet got from last year's number to this year's. It is a roll-forward: start with the opening balance, add what increased equity, subtract what reduced it, and arrive at the closing balance. It is the shortest of the primary statements and the one most readers skip.

Skipping it is a mistake for companies that return a lot of cash. Apple earned $112.0 billion in fiscal 2025 (the year ended September 27, 2025), yet its total shareholders' equity rose only $16.8 billion, from $56,950 million to $73,733 million. The statement shows exactly where the other $95 billion went. It also explains why Apple carries an "accumulated deficit" despite being one of the most profitable companies ever.

This page reads Apple's fiscal 2025 roll-forward line by line, then shows what each component of equity means and which ratios it distorts.

What the statement shows

Shareholders' equity is the residual: assets minus liabilities. It changes for only two reasons. Either the business earns or loses money (income, and items that bypass the income statement), or the company transacts with its owners (issuing stock, buying it back, paying dividends). The statement splits the change accordingly, usually in a grid with one column or block per equity account:

• Common stock and additional paid-in capital (APIC): what shareholders paid in, plus the value of stock awards granted to employees.
• Retained earnings (or accumulated deficit): cumulative net income minus cumulative dividends and, at companies that retire repurchased shares, the part of buyback cost charged here.
• Accumulated other comprehensive income (AOCI): gains and losses that accounting rules keep off the income statement until realized, such as unrealized gains on debt securities, currency translation and some hedges.
• Treasury stock: at companies that hold repurchased shares rather than retire them, a negative account for their cost. Apple retires its repurchased shares, so it has none.

Apple's fiscal 2025 roll-forward, line by line

Why $112 billion of profit added only $16.8 billion

Start with the money returned to owners. Net income of 112,010 less dividends declared of 15,413 and repurchases of 90,052 leaves 6,545. In other words, Apple paid out to shareholders about 94% of what it earned in the year ((15,413 + 90,052) ÷ 112,010).

The rest of the increase came from employee stock. Share-based compensation added 13,246 and stock issued to employees added 1,498, while shares withheld to cover employees' taxes on vesting awards took 4,452 + 1,655 = 6,107. Net, employee equity added 8,637. Other comprehensive income added 1,601, 1,231 of it from unrealized gains on Apple's marketable debt securities. Together: 6,545 + 8,637 + 1,601 = 16,783.

The withholding line is worth understanding. When restricted stock units vest, Apple keeps some of the shares instead of delivering them and pays the employees' tax bill in cash. On the equity statement that looks like a small repurchase; on the cash flow statement it is "payments for taxes related to net share settlement of equity awards," $5,960 million in fiscal 2025.

The three pieces of Apple's equity

Common stock and APIC: $93,568 million. Apple's par value is $0.00001 a share, so nearly all of this is paid-in capital. It grew from 83,276 because 13,246 of stock compensation and 1,498 of issued stock exceeded the 4,452 withheld. Stock-based compensation is a real expense on the income statement but involves no cash, so the accounting credit lands here. (The 13,246 credited to equity differs slightly from the 12,863 of expense on the cash flow statement; the filing reports both without itemizing the gap.)

Accumulated deficit: −$14,264 million. Apple charges the cost of repurchased shares mainly against retained earnings. Over many years that has removed more than all of its cumulative profit, leaving a negative balance even though Apple has been steadily profitable. In fiscal 2025 the deficit shrank from −19,154 because net income (112,010) slightly exceeded dividends, withholding and buybacks charged here (15,413 + 1,655 + 90,052 = 107,120).

AOCI: −$5,571 million. This combines unrealized losses on Apple's marketable securities (at year-end their fair value was $2,291 million below adjusted cost, before tax), currency translation and hedge effects. It improved from −7,172 mainly because the debt securities recovered value: that piece of OCI contributed 1,231 of the year's 1,601. AOCI losses reverse if the bonds are held to maturity, so analysts usually treat them as noise for a cash-rich company.

Buybacks retire shares

Note 10 of the 10-K adds the share count. During fiscal 2025 Apple repurchased 402 million shares for $89.3 billion, an average of roughly $222 a share (89.3 billion ÷ 401.672 million). Shares outstanding moved like this (thousands):

That is a 2.3% fall in shares outstanding. Note the different dollar figures: $89.3 billion in the share-count note, $90,052 million charged to equity, and $90,711 million of cash paid on the cash flow statement. The equity and cash amounts differ because of timing (trades not yet settled at year-end) and items the filing does not break out; read each number in its own statement rather than forcing them to match. The Stock buybacks: how share repurchases work and what they do guide covers buyback mechanics and the 1% US excise tax.

Negative retained earnings is not distress here

At a typical company, an accumulated deficit means losses have exceeded profits: a young biotech or a business that has written off large investments. That reading is wrong for Apple. Its deficit is the residue of returning more cash than it earned, and Apple still reported $132,420 million of cash and marketable securities at the end of fiscal 2025. The way to tell the two cases apart is to read this statement: a deficit built by net losses shows up as negative net income lines, while one built by repurchases shows up as large "common stock repurchased" lines.

The side effect is distorted ratios. A small equity base inflates return on equity (Apple's ROE on average equity was 171.4% in fiscal 2025) and price-to-book (51.2 at the September 26, 2025 close). Those figures say more about Apple's capital return policy than about its operations. The Return on equity (ROE): formula, DuPont analysis and pitfalls and Price-to-book ratio (P/B): book value, buybacks and ROE pages show how to adjust for it.

How this statement compares with its neighbors

Net income links the income statement to this one; the closing balance links this one to the balance sheet. The How the three financial statements link, checked on Apple page traces those connections.

How Finabase does it

The Balance sheet card on the Financials tab lists Apple's equity, retained earnings and accumulated other comprehensive income for each period, and the Cash flow card shows equity issuance or buyback, dividends paid and share-based compensation. Select a row to chart it over up to 40 annual or quarterly periods, which makes the long slide in retained earnings easy to see. Ten fiscal years of ROE and price-to-book are on the Valuation tab. Finabase does not display the equity statement grid itself; for the line-by-line roll-forward, read the 10-K.

Frequently asked questions

What does the statement of shareholders' equity show?

It shows how total equity changed during the period, line by line: net income, other comprehensive income, stock issued and stock compensation add to equity, while dividends and share repurchases reduce it.

Why does Apple have negative retained earnings?

Apple charges most of the cost of the shares it buys back against retained earnings, and it has repurchased more stock than its cumulative profits over the years. The negative balance reflects cash returned to shareholders, not losses.

Does stock-based compensation increase equity?

Yes, stock-based compensation increases paid-in capital by the expense recognized, even though no cash comes in. It also dilutes existing owners, which is why buybacks that only offset it leave the share count flat.

Is low or negative equity always a bad sign?

No. Low equity can come from losses, which is a warning, or from buybacks and dividends at a highly profitable company, which is not. Check whether the statement's big negative lines are net losses or repurchases.

Summary

The statement of shareholders' equity reconciles the owners' stake from one balance sheet to the next. For Apple in fiscal 2025 it starts at $56,950 million, adds $112,010 million of net income, $1,601 million of other comprehensive income and net employee stock of $8,637 million, subtracts $15,413 million of dividends and $90,052 million of repurchases, and ends at $73,733 million. The statement explains why a company earning over $100 billion a year can carry an accumulated deficit, why its share count keeps falling, and why ratios built on book equity need careful reading.