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Growth stock screeners have a number of very clear advantages that can't be ignored. Find out about the advantages of growth stock screeners with help from a professional public speaker and radio personality in this free video clip.
Incorporating a sole proprietorship and issuing par value of initial stock is something that you typically have to do in a very specific way. Find out how to properly incorporate a sole proprietorship and issue par value of initial stock with help from an experienced accountant in this free video clip.
Preparing large portobello mushroom caps is something you can do right from the comfort of your own kitchen. Prepare large portobello mushroom caps with help from a personal chef in this free video clip.
Unusual buying volume typically portends to the long-term price increase of a stock for a very specific period of time. Find out about how often unusual buying volume portends to the long-term price increase in a stock with help from a registered investment adviser in this free video clip.
The primary focus of stock investing is on gaining money through appreciation: the increase in the value of stocks over time due to market demand. While demand determines whether stock prices go up over time, some companies make periodic payments to stockholders called dividends, which offer an additional way to earn a return. For dividend-paying stocks, stock prices are reduced by the amount of the dividend based on the "ex-dividend date."
Common stock equivalent is a very basic concept that everyone should know. Get the definition of a common stock equivalent with help from a certified financial planner in this free video clip.
Whether or not it is safe to sell dividend stock depends on a few very important things. Find out if it is safe to sell dividend stock with help from a certified financial planner in this free video clip.
Common stocks have some very important technical advantages associated with them. Learn the technical advantages to a common stock with help from an investment adviser in this free video clip.
The New York Stock Exchange has some very specific rules when it comes to penny stocks. Learn about the NYSE rules on penny stocks with help from a certified financial planner in this free video clip.
Dividend strategy and international stocks are two things that go well together. Learn about dividend strategy and international stocks with help from a certified financial planner in this free video clip.
Corporations receive equity investments from shareholders and also create equity by retaining profits from their operations. Over time the company's total equity fluctuates in response to transactions. This generally does not indicate a problem, but a once-stable company experiencing repeated reductions to total equity should be evaluated with caution.
Intrinsic value is the difference between the strike price and stock market price of a stock. Investors have the option of purchasing a stock at a strike price. If the strike price is $10, and the stock market price is $15, the intrinsic value is $5. Strike prices are available to any investor purchasing a stock through an option contract. A strike price is determined at the time an option is purchased and the contract is written, and the strike price never changes.
Blue chip stocks are shares of companies that have reputations for quality and reliability. Investors who own stock in a blue chip company more likely profit in good times and bad, but they may receive lower annual returns compared to investments made in smaller capitalization companies with a higher potential for growth. Blue chip companies usually have a large volume of shares, which allows investors to cash out their shares easily compared to the thinner trading markets of many small cap stocks.
The sale of restricted stock is a fairly complicated concept in the investment world -- and it is an activity in which few people ever participate. Restricted stock is an equity investment sold to a select few individuals. These individuals may have insider knowledge regarding the company and are generally top executives. Restricted stock must be held throughout a vesting period until it becomes stock that can be bought and sold like any other stock.
An employer may sell stock to his employees or reward his employees with restricted stock in the company. In Delaware, an employer can restrict an employee's rights to the stock for a period of time subject to specific requirements to be met as outlined in a restricted stock agreement. If the employee as grantee of the stock fails to meet the employer's requirements during the restricted term, the company forfeits the shares from the employee back to the company.
With traditional voting, a shareholder may vote for one individual per seat on the company's board of directors. With cumulative voting, a common stock shareholder may cast all his votes for one seat. It gives the cumulative shareholder weight and value with a voice as a minority shareholder. In some situations, such as condominium communities, cumulative voting is advantageous as a means to retain the same board of directors.
If you have a $20 bill and you exchange it at the bank for 20 $1 bills, you do not increase or decrease the amount of money you have — you just increase the number of notes you own. A stock split works much like this. When a company splits its shares, it decreases the price of each share while simultaneously increasing the number of shares owned by investors. Because stock splits increase the number of shares owned by investors, a company may need to file for an increase in authorized shares, but not always. If the company has enough…
Common stock and retained, or treasury stock, are two forms of the same thing: representations of company ownership. While on paper the two types of stock function in the same manner, rules and usage for both do differ, and it's important to understand not only what treasury stock is, but what it does.
Treasury stock is shares repurchased by the original issuing company from the stock’s owner. A business may reacquire its stock for a host of reasons, ranging from improving the stock price, protecting against take-overs, staring an employee stock option plan, or for shifting the corporation’s position in the market. If the stock is retired after reacquisition, several accounts need to be adjusted to reflect the transaction.
Corporations are businesses owned by varying numbers of shareholders. Shareholders pay money for ownership rights in a company and, in return, are given the right to vote for the company's board of directors, among other corporate matters. Additionally, depending on the corporation, shareholders may be entitled to regular dividend payments, generally at the discretion of the board of directors.
Share buybacks are popular with investors because they increase the company ownership percentage represented by each share of stock they own. Generally, when a company announces its intentions to buy back, or redeem, its own stock shares, the company's share price rises as investors buy shares in anticipation of the buyback. While ownership value represented by each share rises, share buybacks generally do not increase the overall intrinsic value of the company, with the exception of a minor increase due to tax savings.
There seems to be no real reason for a stock's “par value” to exist. In general, the term “par value” is most often used in relation to bonds. For stock, it is an entirely different matter and is an arbitrary number printed on a certificate. “Asking price” is a technical term in the stock market that refers to the lowest price a stockholder will accept for a share of that same stock. It is, most commonly, the market value. The two values, “par value” and “asking price,” have no relation to each other.
Some stocks pay dividends, which are a slice of the company's profits. Some investors are only interested in dividends and do not wish to worry about the inevitable fall in stock prices. These investors take advantage of call options. The method is known as short selling, which is the selling of assets and buying them back at a lower price.
Restricted stock is stock that has been sold privately by the issuing company or by an affiliate of the issuing company. If you have purchased a private placement of stock from a company, or if you have purchased shares from a private individual who qualifies as an affiliate of the company, you probably have restricted stock. Usually, there is a stamped legal warning, called a legend, on the certificate, but not all certificates representing restricted stock carry this stamped legend.
One technique corporations use to raise additional capital is to issue common stock. It is the basic form of equity ownership held by shareholders which gives them both ownership rights and a right to vote on certain high level corporate decisions. This stock can be issued out of authorized, but unissued stock or sold out of the company's treasury stock. Both methods increase the company's spending power, although issuing stock out of authorized stock dilutes the equity of current shareholders.
The act of selling treasury stock allows the principal owners of a business to raise cash for its activities in exchange for a share in its income and, hopefully, profits. Treasury stock refers to a corporation repurchasing its own shares of stock and holding those shares for future transactions, instead of retiring them outright and reducing the number of outstanding shares.
A pro rata allocation of common stock occurs when common shares are sold to investors. An investor who purchases shares of common stock receives a unit of ownership of the company for each share purchased. The amount of common shares owned determines how much dividends are allocated to him, how much stock he receives in a stock split and how much assets are distributed to him in the event of a corporate liquidation.
A holding period return of a common stock is the percentage return you earn over a certain period of time based on the change in stock price and the dividends you receive from the stock. You can calculate a stock’s expected holding period return using a forecast stock price and forecast dividend payments. A higher holding period return means you expect the investment will be more profitable. A negative holding period return means you expect the investment will lose money.
Corporations are owned by stock holders, the people who own shares of the company. The determination of how many shares the company is authorized to issue is, in a large part, made arbitrarily when the organization drafts and files its articles of incorporation. However, state requirements governing corporations and authorized shares differ, so consult an attorney if you need legal advice.
When a publicly traded company earns a profit, its profits are shared by investors who own company stock. Some companies distribute earnings directly to investors in the form of cash dividend payments. Some companies use part of their earnings to buy back shares of their own stock. Investors usually benefit through higher share prices when a company purchases its own stock even though share buybacks actually reduce total shareholders' equity.
A stock warrant gives the holder the right to buy a certain number of shares at a predetermined price within a specified period of time. Warrant-holders do not receive dividends or vote at annual general meetings until they convert their warrants to shares. Companies issue warrants to make bonds more attractive for investors or as compensation for employees and management.
Stocks are set lower after dividend payouts, but following a price reset, stocks may drop even lower or rise higher in market trading. While dividend payouts affect stock price fundamentally, market trading forces also influence stock price. In other words, dividend payouts change the value in stocks, but also provide an indication about future earnings and stock performance that may encourage or discourage market trading. Investors often use current dividend payouts as a basis to price-in potential changes to the stock price.
A company's earnings-per-share figure will automatically increase after a reverse stock split. Investors should understand, however, that such an increase does not mean that the company's financial performance has improved. It just means that the company's earnings are being distributed among fewer shares. Also, the company's financial statements should take this effect into account when comparing current and past performance.
Common stocks refer to those securities that represent partial ownership of a corporation. In other words, when people buy common stocks in corporations, they are actually buying part ownership of the affected corporations. This further means that people can make claims on the profits of corporations when they purchase the corporations’ common stocks. The sizes of such profits increases or decreases as the fortunes of the affected corporations changes
When a company splits its stock, it increases the number of shares outstanding and decreases the price per share. The number of the shares investors own increases, but the total value of their shares does not change because the split decreases the price per share according to the split ratio. An easy way to remember how a split works is to think of it like exchanging one dime for two nickels. If those coins were stock, the split ratio would be 2:1 or two-for-one. After the split, the total value of your money is still 10 cents but instead of…
Giving employees stock is a common way to reward good workers and offer a variety of incentives. However, buyouts tend to change either the ownership of the company or how the company manages its stock. These changes cause equivalent changes in employer ownership of stock. There is typically fair recompense for any stock lost, but this depends on the type of buyout. Some buyouts occur within the company, some are made by competitors and some are a form of equity restructuring.
Stock splits, whether forward or reverse splits, do not affect retain earnings or the market capitalization of a company. A forward split occurs when investors receive additional shares after the split. A reverse split occurs when investors have fewer shares after the split. Stock splits affect the number of shares outstanding and stock price, but that’s about all.
Common stockholders' equity measures the amount of money that would be distributable to common shareholders if a company were to liquidate its assets. Common shareholders are low on the totem pole of people to be paid and only receive the proceeds of the sale remaining after a company pays off all its creditors.
Stock shares issued means the same thing as stock shares sold. A stock split is either a forward split, most commonly referred to simply as a stock split, or it is a reverse split. In a forward split, shareholders receive additional stock. In a reverse split, the company repurchases existing shares from investors.
Treasury stock is created when a corporation buys back its own stock from stockholders and holds the shares rather than retiring them permanently. Treasury stock is reported in the equity section of the company's balance sheet. Repurchase of stock results in a net decrease in the company's equity because the company uses cash to buy back stock. Treasury stock does not represent an asset, and there are no voting rights, liquidation rights or rights to dividends on treasury stock.
Stock dividends occur when a corporation of distributes additional stock existing shareholders. No tax reporting is required when a stock dividend is received as long as distributions are common stock only to every recipient, not cash or preferred stock. Accounting for future gain or loss from selling shares received as a stock dividend requires knowing the basis for the stock dividends. The basis of non-taxable stock dividends is determined by allocating part of your cost in originally owned shares.
The volume is the number of shares of a company's stock that trades on a day, week or some other period without adjusting for stock splits. The trading volume depends on the number of orders from individual and institutional investors. When the trading volume of a company's shares falls to zero, it means that the stock exchange is no longer accepting or processing buy or sell orders. This stoppage could be for a few hours, or it could be permanent.
Businesses acquire the resources used in their operations either through incurring debts and other such obligations to other economic entities or through investment from their owners. On the balance sheet, this is represented as a business’s assets being equal to its liabilities plus its equity. In the case of corporations that raise their capital through selling shares in their capital stock to investors, their stock shareholders can be considered their owners and their equity is known as stockholders’ equity or shareholders’ equity.
Restricted stock shares are shares of stock that contain sale restrictions. You may receive restricted stock from the company you work for as a work incentive. Likewise, you may receive restricted shares in a newly formed company if your company merges with another company. If your shares are restricted, you will not be able to sell them until certain conditions are first met.
The action of spinning off a corporation is not a very popular one, as it involves the reduction in size of the corporation, and most managers are paid based on the size of a given company. Spinning off a corporation decreases a the number of people an executive manages and the revenue he is responsible for. However, spinning off a corporation does have some value and is one way to maximize shareholder value.
The stockholder equity section of the balance sheet reports each aspect of the company’s equity. This includes stock issued to investors, the accumulated earnings of the company and any stock repurchased by the company. The stock repurchased is called treasury stock and reduces the total value of stockholder equity. The company may resell the treasury stock at a price higher than it paid. The accountant records the purchase of treasury stock and the reissuance.
A common stock represents a share ownership right in a company. The common stockholders of a company are its owners, who vote in annual general meetings and elect the board of directors. The common shares of publicly listed companies trade on stock markets. The treasury stock account records the value of repurchased shares that the company has not retired. Repurchasing stocks is one way for a company to return some of its surplus cash to shareholders.
An S corporation is a company structured under the sub-chapter S tax code of the Internal Revenue Service. This tax election allows the earnings to pass directly to the owners, thereby avoiding corporate income taxation. Subchapter S corporation rules allow for only one class of common stock and preferred stock is not allowed. Furthermore, certain types of debt can be deemed a second class of stock. Other rules governing S corporations state that there must be fewer than 75 outside investors and stock rights must be identical for all shareholders, which also applies to treasury and unissued stock.
When a loved one dies, handle as swiftly as possible the matters concerning his estate, including the redemption of his stock certificates. Each stock certificate bears the decedent’s name, the name of the corporation that issued the stocks and the number of shares owned. Because your name is not listed on the stock certificate, you must go through a legal process to redeem them.
Many investors buy stocks with cash dividends so they can receive a return while they wait for the shares of the stock to appreciate. Stock dividends are totally different. They do not provide an investor with an extra return. An impact on shareholder's equity occurs, but it does not increase the account.
