Rationale: The par value is an arbitrary amount specified in the corporate charter for each share of stock. Generally it has no substance from a financial reporting or analysis perspective. The correct answer is: An arbitrary amount set by the company for each share of stock.
Why is the par value for a stock so low?
Why is the par value of a stock so low? Corporations do this because it helps them avoid liability to stockholders should the stock price take a turn for the worse. For example, if a stock was trading at $5 per share and the par value on the stock was $10, theoretically, the company would have a $5-per-share liability. Click to see full answer.
What does "par value" mean in stocks?
Par value is a per share amount appearing on stock certificates. It is also an amount that appears on bond certificates. In the case of common stock the par value per share is usually a very small amount such as $0.10 or $0.01 or $0.001 and it has no connection to the market value of the share of stock.
What is considered good EPs in the stock market?
What Is Considered a Good EPS in the Stock Market?
- Evaluating EPS Data. Earnings are a measure of a company's profits over a period of time. ...
- Measuring Against Expectations. One of the most transparent ways to determine whether a company has good earnings is to measure results against third-party expectations.
- Comparing to Similar Companies. ...
- Other Determining Factors. ...
Is under par better than over par?
It's better to be under par than over par, but the score may be relative to your level of competition or your personal goals. As mentioned in Section 1, a par score is attained when a golfer completes a hole in the number of strokes listed on the course scorecard.
Which of the following best describes par value?
Which of the following best describes par value of a corporation's stock? It is an established value for a company's stock, generally very low, below which the stock cannot be originally issued.
What does par value tell you?
The par value is the amount of money that bond issuers promise to repay bondholders at the maturity date of the bond. A bond is essentially a written promise that the amount loaned to the issuer will be repaid. 3. Bonds are not necessarily issued at their par value.
What does par value mean quizlet?
Par value is an arbitrary, fixed per share amount assigned to a stock by the incorporators. It is recognized by the state of incorporation as the amount that must be paid in for each share if the stock is to be fully paid when issued.
What is the purpose of par value stock?
Par value is the stock price stated in a corporation's charter. The intent behind the par value concept was that prospective investors could be assured that an issuing company would not issue shares at a price below the par value.
What does par mean in finance?
at face valueThe term "at par" means at face value. A bond, preferred stock, or other debt instrument may trade at par, below par, or above par.
What is par value and market value?
The entity that issues a financial instrument assigns a par value to it. When shares of stocks and bonds were printed on paper, their par values were printed on the faces of the shares. Market value, however, is the actual price that a financial instrument is worth at any given time for trade on the stock market.
Does par value have a direct relationship to the market value of the common stock?
Par value has no direct relationship to the market value of the common stock. In the event a corporation is dissolved, preferred stockholders receive preference over common stockholders in the distribution of assets . Preferred stockholders usually have voting rights.
What is the difference between the market value per share and the par value per share quizlet?
Par value is the legal capital per share amount chosen by the corporation and printed on the stock certificates. Book value is the total shareholders' equity divided by the number of shares outstanding. Market value is the price investors are willing to pay for shares of stock.
What happens if common stock is issued for an amount greater than par value?
Correct Answer: Option C) Paid-in Capital in Excess of Par Value.
What is meant by par value and what is its significance to stockholders?
Par value can be thought of as being the stock share's nominal price. Often, it is the price at which a corporation's initial shares are sold to the public and it is a promise of ensured value in that the corporation will not issue additional shares at a price lower than that.
Is par value face value?
Par value is the face value of a bond or a share of stock. Par value is set by the issuer and remains fixed for the life of a security—unlike market value, which fluctuates as a stock or bond changes hands on the secondary market.
How much was Johansen stock option expense in 2014?
Johansen Corporation's stock option footnote discloses before tax stock option expense of $457 million for fiscal 2014. The after tax stock option expense is disclosed as $244 million dollars. Johansen must increase its deferred tax assets by $213 million on its balance sheet for 2014.
Why do bond prices fluctuate?
Market prices of bonds fluctuate because the company's obligation (in the form of principal and interest payments) remains fixed. Most gains and losses on bond repurchases are reported as extraordinary items. Unlike stock, once sold, bonds can only be traded in private transactions between arms' length parties.
Can bonds be traded in private?
Unlike stock, once sold, bonds can only be traded in private transactions between arms' length parties. T&F. False. Contingent liabilities that are 'probable' and can be reasonably estimated are recorded on the balance sheet as a liability and as an expense in the income statement.
Is depreciation included in cash flows?
Depreciation is a non-cash expense, thus it is not included in the statement of cash flows. -The year-over-year change in property, plant and equipment on the balance sheet is equal to depreciation expense. -Property, plant, and equipment from the prior year multiplied by depreciation rate reported in the footnotes.
