What is Stated Value?

Mary McMahon
Mary McMahon

Stated value is a value for stock which is recorded for the purposes of accounting. The company uses stated value in its internal accounts and reports, but it does not have an impact on the actual market value of the stock. As a result, many stockholders do not concern themselves with stated value since they are more interested in much they will be able to sell their stock for on the market than what the recorded stated value of their stock is on the books of the company concerned.

Stated value is a value for stock which is recorded for the purposes of accounting.
Stated value is a value for stock which is recorded for the purposes of accounting.

One of the most common ways to determine states value is to look at the capital accrued during the sale of a new stock issue and to divide that by the number of shares sold. This is used to record a stated value in the books of the company. When stocks have a par value, a value recorded on the face, this is recorded as their value; stated value is used only for valuing no par value (NPV) issues.

The market value of the stock can vary considerably from the stated value and it also goes through fluctuations in response to changing market influences. Stated value, on the other hand, remains constant and is considered to be part of the firm's equity capital for accounting purposes. Companies also track the market value of their stocks separately because the value on the market per share can reflect investor attitudes about the company and its future.

Accounting for big companies can get highly technical and very complicated. There are a number of rules about accounting procedure which must be followed to ensure that shareholders are protected. These rules mandate certain disclosures in addition to requiring legal and transparent accounting practices so that people with stock in the company can see for themselves how well the company is being run and what kind of profits it is generating.

When examining financial disclosures from a company which is required to report publicly, people can see a number of different accounting categories. Reading such reports can require some special skills and knowledge and some investment guides provide detailed instructions on how to read financial disclosures, prospectuses, and other documents sent out by publicly traded companies. Sometimes the most revealing information is between the lines of such statements and practiced readers can identify warning signs which might influence their investment decisions as they attempt to balance their portfolios.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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