How to Calculate Par Value of Common Stock

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The denominations of ordinary shares are its stated denomination. The issuance organization determines the par value when the stock originates; it’s usually pretty low – $0.01 or even $0. The denomination differs from the current market price of the stock. In theory, if the market price of a stock falls below par, the company may be responsible for the spread. The share of shareholders’ equity in the company’s balance list provides information on the par value of ordinary shares.

How to Calculate Par Value of Common Stock | Onefctv
How to Calculate Par Value of Common Stock | Onefctv

Step 1
Check out the company’s financial statements for balances. It must have three parts: assets, liability, and shareholders’ equity. Transfer to the shareholder capital portion of the balance table. Sometimes the company uses the term “shared equity”, which means the same.

Step 2
Identify the line referring to the issuance of ordinary shares of the company. It would say something such as “book value of circulating ordinary shares” or “book value of ordinary shares.” This line will also provide the number of shares in circulation and the denomination of ordinary shares if any.

Step 3
If the denomination is not clearly stated, then divide the book value of the circulating ordinary shares by the number of ordinary shares in circulation. The result is par value for a share of that company’s common stock.

The denomination has little or no significance in terms of the value of common stock. It makes more sense for holding preferred stocks or debt instruments, such as bonds.

What you need
Company Financial Statements

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