Hello there,
I've a concern on capital structure, when I read BPP learning & revision Kits, there's where they get the number of shares divide by nominal value & there is where normal value let's 25c is multiply by the number of shares in issue.
So, when do I multiply? when do I divide?
Thank you so much for your kind help on this.
Rgrds,
ACCA Forums
FACapital Structure & Finance costs.
Think this is a matter of keeping units consistent. For example if you wanted to know market value of company with a million shares priced at 50c a share then market value of total company would be five hundred thousand dollars ($0.5 x1000000 = $500000). If 2 dollars were price per share it would be 2 million dollars $2 X 1000000 = $2000000. Hope this helps.
Thank you so much mrjonbain.
And what do I get if get 1000000/0.5=20000000?
How is this 2M Called since it's not market value of the company.
Thank you once again.
Sorry, I may have inadvertently misled you with my response. Shares are issued with a nominal value. If you are trying to determine number of shares issued ,and you have knowledge of nominal price ( or par value) of each share issued and the share capital of company in terms of entry on statement of financial position you need to divide this statement of financial position figure by nominal value of each share issued to determine total number of shares issued.
Total share capital = total number of shares issued X nominal value of each share.
This applies to accounting values related to statement of financial position we which is not connected to Market values nor valuation of company. Of course above equation can be rearranged.
Thank you so much Mr. John.
Does your last response therefore reverse the first one you gave me when you first replied?
Yes, I believe it answers your question. You are welcome.
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