Eiginfjárgrunn

Eiginfjárgrunn is an Icelandic term that translates to "equity fund" or "shareholder equity fund." It refers to the portion of a company's assets that belongs to its owners, the shareholders. This represents the residual interest in the assets of an entity after deducting all its liabilities. In simpler terms, it's what would be left for the shareholders if the company were to liquidate all its assets and pay off all its debts.

The composition of eiginfjárgrunn typically includes share capital, which is the money raised by issuing shares, and retained earnings, which are profits that the company has kept over time rather than distributing as dividends. It can also include other reserves and surplus. The value of eiginfjárgrunn is a key indicator of a company's financial health and its ability to fund its operations and growth.

Changes in eiginfjárgrunn can occur due to various factors. Issuing new shares increases it, while share buybacks decrease it. Profitable operations that lead to retained earnings will increase eiginfjárgrunn, whereas losses will decrease it. Dividends paid to shareholders reduce eiginfjárgrunn. Financial analysts and investors closely examine the trend of eiginfjárgrunn to assess a company's long-term value and performance. It is a fundamental concept in accounting and corporate finance.