What is the value of shares of a joint-stock company
The value of shares of a joint-stock company varies, and in this article we will consider all types of its value, but first, lets repeat the basics of economic theory.
At the moment, one of the most common forms of business organization is joint-stock companies, which, as you know, are of two types - closed and open.
Open joint-stock companies, in order to increase their assets and raise funds, issue (issue) shares, which serve as confirmation of the investment of the investors capital share in the joint-stock company, which as a result gives the right to receive profit from the enterprise in the form of dividends.
The shares of closed joint-stock companies are of little interest to us in terms of investment and trade in them, since they are in circulation only among the founders of the CJSC.
Types of promotions
As we know, there are ordinary and preferred shares.
Ordinary shares are the foundation of corporate business, they provide the holder with the opportunity to participate in the meetings of shareholders of the issuing company, provide the right to vote, and allow you to receive income from the activities of the enterprise.
Preferred stocks are securities with a fixed dividend on them, which give the right to first profit at a predetermined fixed rate, which is higher than ordinary shares. It is thanks to preferred shares that the owners of enterprises provide themselves with a constant amount of income.
One of the advantages of a preferred share is that in the event of the collapse of the company or its bankruptcy, the holder can claim the rights to receive part of the organizations assets. However, if the company has received additional income, only holders of ordinary shares will receive dividends.
So, the value of shares of a joint-stock company is:
- par value is the value assigned during the issue by the enterprise that issued the share;
- market - is set based on the price of a share placed on the open securities market. The market value is determined by the ratio of supply and demand, and may differ significantly from its nominal value. If the market price of a security is above its par value, the price is said to be above par. And, accordingly, vice versa, if the market price of a security fell below its par value, it is said that the share is traded below par;
- balance sheet - reflects the accounting estimate of the value of the share and is calculated based on the total property complex of the organization, its authorized capital and the amount of its liabilities. Often used as a measure of the backing of an enterprises shares;
- liquidation price - the price that will be received by the shareholder upon liquidation of the enterprise, repayment of obligations and payment of preferred shares;
- investment - is of most interest to investors, as it reflects the profitability and profitability of shares.