The importance of Par Value
question to the Stock Market masters and gurus in SMP, I would like to know the importance of par value. Why is par value an important concept to know. And is par value observed during an event of redemption of bankruptcy?
Par value is used as basis of how much yung total contribution (multiplied by outstanding shares) ng equity holders during Public offering. This is just an accounting (nominal) value and does not relate to the actual market prices of a stock. Usually, par value increases when there is a stock rights offer, follow-on offer, employee stock options, etc. Basically, it's used mainly for accounting purposes.

Regarding liquidation during bankruptcy, all you have to know is how MANY shares you hold. For example, if you hold 1% of ALL outstanding shares of that company, you get 1% of the RESIDUALS.

RESIDUALS means tira-tira. Just like I have mentioned on the other thread, priority muna ang creditors before equity holders. So for example, bankrupt na ang company, and upon selling all assets, binayaran na ang creditors eh may natirang Php100k, eh paghahati-hatian yun ng libo-libong shareholders according to percentage of ownership.

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