Contributed Capital Calculator
Introduction
Contributed capital is an essential component of a company’s equity. It represents the amount of money that shareholders have invested in the company. This article will guide you on how to calculate contributed capital using a simple calculator.
How to Use
To use the contributed capital calculator, enter the required information in the respective fields and click the “Calculate” button. The calculator will then display the total contributed capital.
Formula
The formula to calculate contributed capital is straightforward:
Contributed Capital=Common Stock + Additional Paid-in Capital
- Common Stock: The par value of the shares issued.
- Additional Paid-in Capital: The amount paid by investors above the par value of the shares.
Example Solve
Suppose a company has issued 10,000 shares with a par value of $1 per share. Additionally, investors paid $5 per share above the par value.
- Common Stock = $1 * 10,000 = $10,000
- Additional Paid-in Capital = $5 * 10,000 = $50,000
Using the formula:
Contributed Capital=$10,000+$50,000=$60,000
Frequently Asked Questions
What is contributed capital?
Contributed capital is the total value of cash and other assets that shareholders have provided to a company in exchange for stock.
How is common stock different from additional paid-in capital?
Common stock refers to the par value of the shares issued, while additional paid-in capital is the amount paid by investors above the par value.
Why is calculating contributed capital important?
Calculating contributed capital is crucial for understanding the total amount of funds raised from shareholders, which is a key aspect of a company’s financial health.
Can contributed capital be negative?
No, contributed capital cannot be negative as it represents the actual funds received from shareholders.
Conclusion
Understanding and calculating contributed capital is vital for investors and financial analysts. It provides insight into the equity financing of a company and helps assess its financial stability.