Share, face value market value equity share dividend bonus share What is a Share? Definition: A unit of ownership interest in a corporation. Capital Structure: Total Capital is divided into shares to make it tradable. Formula for Total
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Presentation Transcript
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Share, face value market value equity share dividend bonus share<br>
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What is a Share? Definition: A unit of ownership interest in a corporation.
Capital Structure: Total Capital is divided into "shares" to make it tradable.
Formula for Total Share Capital:
Total Share Capital = Total Number of Shares x Face Value per Share<br>
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Face Value (FV) Definition: The nominal value of a security stated by the issuer.
Usage: Basis for calculating dividends and legal capital.
Formula to find Face Value from Capital:
Face Value = Equity Share Capital/Total Number of Shares Issued<br>
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Market Value (MV) Definition: The current price at which the share is trading on the stock exchange.
Market Capitalization: The total "market worth" of the company.
Formula for Market Cap:
Market Capitalization = Current Market Price (CMP) x Total Outstanding Shares<br>
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Equity Shares Definition: The "ordinary" or common shares of a company that carry voting rights and represent "ownership capital."
Features:
Voting Rights: Shareholders participate in corporate decision-making.
Residual Claim: Equity holders are paid last after creditors and preference shareholders.
No Fixed Income: Returns depend on the company’s profit.<br>
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Dividend? Definition: A portion of the company’s profit distributed to its shareholders.
Mechanism:
Proposed by the Board of Directors.
Usually expressed as a percentage of the Face Value.
Example: A 50% dividend on a share with ₹10 Face Value equals ₹5 per share.
Types of Dividends
Interim Dividend: Declared and paid during the financial year before the final accounts are ready.
Final Dividend: Declared at the Annual General Meeting (AGM) after the close of the financial year.
Dividend Yield: A ratio that shows how much a company pays out in dividends relative to its stock price.<br>
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Bonus Shares Definition: Additional shares given to existing shareholders for free, based on their current holdings.
Purpose: To capitalize the company’s reserves and make the stock more affordable/liquid.
Ratio Example: A 1:1 Bonus means you get 1 free share for every 1 share you already own.<br>
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Impact of Bonus Shares Investment Quantity: Increases (your total number of shares goes up).
Share Price: Decreases proportionally (the market value adjusts so the total investment value stays the same initially).
Psychological Effect: Investors view it as a sign of company health and future growth.<br>
