Annals of the „Constantin Brâncuşi” University of Târgu Jiu, Economy Series, Issue 3/2015 „ACADEMICA BRÂNCUŞI” PUBLISHER, ISSN 2344 – 3685/ISSN-L 1844 - 7007 THE STATEMENT OF CHANGES IN EQUITY – ENTITY PERFORMANCE FINANCIAL ANALYSIS REPORT Mihaela Iuliana DUMITRU PHD. LECTURER, UNIVERSITY OF PITEŞTI, FACULTY OF ECONOMICS, DEPARTMENT OF ACCOUNTING, PITEŞTI, ROMANIA mihaela.dumitru@upit.ro Maria Daniela BONDOC PHD. ASSOCIATE PROFESSOR, UNIVERSITY OF PITEŞTI, FACULTY OF ECONOMICS, DEPARTMENT OF ACCOUNTING, PITEŞTI, ROMANIA daniela.bondoc@upit.ro Abstract A tool used to assess entity performance is the statement of changes in equity, which is a component of the set of financial statements. The statement of changes in equity shows in detail all variations of equity throughout an accounting period (between its beginning and its end). Thus, we can notice if the equity item was maintained or whether it “eroded”, respectively, if we are talking about overall profit or loss. The results of our research highlighted a robust financial autonomy of the entity in the analyzed period, while its equity increased, which showed an improvement of its financial performance. Key words: equity, financial statements, performance, financial autonomy JEL : D22, G32, M41 1. Introduction and context of the study Although there is no standard dedicated to equity among the International Financial Reporting Standards (IFRS), equity can be found in other standards which require its measurement and presentation (for example IAS 1 – Presentation of Financial Statements, IAS 8 – Accounting Policies, Changes in Accounting. Estimates and Errors, IAS 16 – Property, Plant and Equipment, and IAS 38 – Intangible Assets, etc.). Our objectives in this paper are related to conceptual clarifications related to the equity capital, which is the content of the document Statement of changes in equity, as well as the impact of equity on performance through the analysis of the financial autonomy rates for the entity (C.N.T.E.E Transelectrica S.A.). 2. Meaning of the concept of “changes in equity” Equity comprises all own financial sources available to an entity for a period of more than one year, more specifically, the financial sources it can use to purchase the assets required in the investment process [11] or, according to other authors’ specifications [2], “a delimitation of the own resources supplied by the assets’ owner”. In the opinion of the International Financial Reporting Standards, transposed in Order no.1802/2014 of the Ministry of Public Finance approving the Accounting Regulations on the annual individual financial statements and the annual consolidated financial statements, equity is shareholders’ or associates’ residual interest in the assets of an entity after deducting all its liabilities. Thus, the size of equity depends on the assessment of the assets and liabilities [3]. The difference between the total assets and the total contracted liabilities (residual interest) provides a first and main (accounting) assessment of the company as at the date when the accounting period is closed [12]. It is considered that [7], from the financial point of view, the creation of the equity of the entity is a financing operation, due to the fact that equity is created and increased based on internal and external contributions. Internal contributions are formed from the resources arising from the own activity of the company (self-financing), and the external ones especially from its owners. The changes occurring within the equity between the beginning and the end of the accounting period (as reflected by means of the statement of changes in equity), highlight the increase or the decrease in the net assets throughout the accounting period. We will find all the details of the variations of equity throughout the accounting 21