How to Calculate Share Capital
Share Capital (or capital stock) is the fund raised by a listed company through the issuance of common stock (ordinary shares) and preferred stock (preference shares).
There are different types of share capital such as the Authorised Share Capital, Issued Share Capital, etc. The authorised capital of a company is the maximum value of securities that a limited company can legally issue to its shareholders. Issued capital is the nominal value of the part of the share capital that has been issued to shareholders.
Calculation:
Authorized capital = Number of permitted shares * par value
Issued capital = Number of shares actually issued * par value
Example:
A company issued 10,000 ordinary shares (nominal value of $1 each) at a subscription price of $6 per share, and 5,000 7% preference shares (par value $0.50) at a price of $5 per share. Then,
Issued Share Capital = 10,000 * $1 + 5,000 * $0.50 = $12,500
* Next: Different Types of Share Capital
There are different types of share capital such as the Authorised Share Capital, Issued Share Capital, etc. The authorised capital of a company is the maximum value of securities that a limited company can legally issue to its shareholders. Issued capital is the nominal value of the part of the share capital that has been issued to shareholders.
Calculation:
Authorized capital = Number of permitted shares * par value
Issued capital = Number of shares actually issued * par value
Example:
A company issued 10,000 ordinary shares (nominal value of $1 each) at a subscription price of $6 per share, and 5,000 7% preference shares (par value $0.50) at a price of $5 per share. Then,
Issued Share Capital = 10,000 * $1 + 5,000 * $0.50 = $12,500
* Next: Different Types of Share Capital