1. What is Common Stock?

Common stock represents ownership shares in a corporation and a claim on part of the company's assets and earnings. It typically carries voting rights and may pay dividends.

2. How Does the Calculator Work?

The calculator uses the common stock value formula:

Where:

• \( \text{Par Value} \) — Nominal value per share (USD/share)
• \( \text{Shares} \) — Number of shares owned

Explanation: The par value is the minimum price per share set in the corporate charter, while the market value may differ based on company performance and market conditions.

3. Importance of Common Stock Calculation

Details: Calculating common stock value is essential for financial reporting, accounting purposes, and understanding the legal capital of a corporation.

4. Using the Calculator

Tips: Enter the par value per share in USD and the number of shares. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between par value and market value?
A: Par value is a nominal value set in corporate documents, while market value is the current trading price determined by supply and demand.

Q2: Why do some stocks have very low par values?
A: Many companies set low par values (e.g., $0.01) to minimize potential liability to shareholders if the company becomes insolvent.

Q3: Is par value the same as issue price?
A: No, issue price is what investors actually pay per share when the stock is first sold, which is often higher than par value.

Q4: Do all stocks have par value?
A: No, some jurisdictions allow "no-par" stock, though most corporations still assign a nominal par value.

Q5: How does this relate to balance sheet accounting?
A: The par value × shares appears in the common stock account, while any amount paid above par goes to additional paid-in capital.