Face value is the par value of the stock. It is used to determine how much cash a company needs to put in reserves.
Example -
Reliance stock face value is 10 Rs per share and it's outstanding shares in the market are 3238.43 Million. So RIL has to put 32384.3 million Rs in it's reserves.
RIL can not pay dividends to it's shareholders from this reserve cash. This reserve is kept as a guarantee for creditors of the company. In case of bankruptcy, this amount is used to pay off creditors and pay the debt.
Market price has no relation to the stock price.Face value is also used to calculate the dividend.
If RIL declares the dividend of 100% of face value, it means that company will pay 10 Rs per share to the shareholders.
What do you think on this topic? Please express your opinion or ask any question through comment below. You can write to me at reply2sagar@gmail.com
Example -
Reliance stock face value is 10 Rs per share and it's outstanding shares in the market are 3238.43 Million. So RIL has to put 32384.3 million Rs in it's reserves.
RIL can not pay dividends to it's shareholders from this reserve cash. This reserve is kept as a guarantee for creditors of the company. In case of bankruptcy, this amount is used to pay off creditors and pay the debt.
Market price has no relation to the stock price.Face value is also used to calculate the dividend.
If RIL declares the dividend of 100% of face value, it means that company will pay 10 Rs per share to the shareholders.
What do you think on this topic? Please express your opinion or ask any question through comment below. You can write to me at reply2sagar@gmail.com
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