> For the complete documentation index, see [llms.txt](https://help.modelreef.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.modelreef.io/help/drivers-variables-and-timing/equity-variables.md).

# Equity Variables

This article explains **Equity variables** in Model Reef.

You will learn:

* What an Equity variable represents.
* How equity injections and opening equity positions are modelled.
* How Equity affects the Balance Sheet, Cashflow and valuation metrics.
* How Equity variables are used in transaction and fund modelling.

Equity variables record capital provided by shareholders or unit holders to the business.

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### What an Equity variable is

An **Equity variable** captures:

* New equity contributions into the business.
* Opening equity balances at the model start.

Examples:

* Seed, Series A, B, C funding rounds.
* Rights issues, secondary raises.
* Capital contributions from owners in private companies.

Model Reef treats all equity cash in as the same class for modelling purposes; it does not separately track share classes or dilution inside the core engine.
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### Equity variables in the Balance Sheet

In the **Balance Sheet**:

* Equity injections increase **Share Capital** and **Cash**.
* Opening equity positions are visible in the initial equity section.
* Retained earnings are tracked separately via NPAT and dividends, not through Equity variables.

This ensures a clear separation between capital contributed by owners and profits retained in the business.
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### Equity variables in the Cashflow Statement and Cash Waterfall

In the **Cashflow Statement**:

* Equity injections appear under **Financing cash inflows**.
* They increase cash but do not affect P\&L.

In the **Cash Waterfall**:

* Equity cash in is shown in the financing section.
* It helps reconcile the change in cash available to equity holders.

Equity outflows, such as dividends, are handled by Dividend variables, not Equity variables.
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### Equity variables and valuation

Equity variables are important for:

* **Equity IRR** calculations, where the initial equity invested is compared to future free cashflows to equity.
* **Money multiple** and payback, where equity in is compared to distributions and terminal value.
* Assessing capital structure choices when combined with Liability variables.

In acquisition scenarios, the purchase price is usually modelled as an equity input with associated debt funding modelled via liabilities.
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### Limitations and scope

Model Reef does not attempt to fully model:

* Detailed share registers.
* Option or warrant instruments.
* Complex equity waterfalls with multiple share classes.

These are usually handled in separate cap table tooling, while Model Reef focuses on cash and economic outcomes.
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***

## Related articles

* [Network-Level Consolidated Reporting](/use-cases/franchise-networks-franchisors-and-franchisees/network-level-consolidated-reporting.md)
* [Build an Equity Valuation Model (FCFE)](/how-tos/valuation/build-an-equity-valuation-model-fcfe.md)
* [Equity](/help/financial-outputs-and-valuation/equity.md)
* [Payment Terms UI](/syntax/timing-syntax/payment-terms-ui.md)