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Definition of Shareholder’s equity

Shareholder’s equity represents the amount which is obtained from deducting all liabilities from company’s total assets. It simply refers the claim of shareholders over the assets of a company after paying off all the debts and obligations.

Formula for calculating shareholder’s equity:

The below given formula can be used in this calculation:

Shareholder’s equity is also known as “book value” of company.

Since the company’s assets are shown at their cost or lower (and not at their market values), it will be important not to associate the reported amount of Stockholders’ equity with the market value of the company. Hence, it is a poor choice of words to refer to Stockholders’ Equity as the corporation’s “net worth”.

 

Subscribed share capital – meaning & example

Meaning of subscribed share capital:

Subscribed share capital is that part of issued share capital for which a company has positively received subscription from the investors.

Subscribed share capital

In simple words, when a company issues shares to raise fund, it may or may not find the investors for all of its shares. Thus, the part of issued share capital for which company has successfully found the subscribers is known as subscribed share capital.

Example:

Let’s assume that ABC ltd. is registered with a total authorized share capital of INR 1,00,00,000 divided into shares of INR 10 each. The management issues 8,00,000 shares to raise a fund of INR 80,00,000. However, the investors subscribe for only 6,00,000 shares. The company calls for INR 4 per share out of INR 10 (nominal value of shares) and it receives the amount for only 5,50,000 shares.

Now,

Authorized share capital 1,00,00,000
Issued share capital (8,00,000 × 10) 80,00,000
Subscribed share capital (6,00,000 × 10) 60,00,000

So, from the figures given above, it is clear that the subscribed capital for ABC Ltd. is INR 60,00,000. It means that out of 8,00,000 shares, investors have subscribed only for 6,00,000 shares.

Definition of Treasury bills

Treasury bills are one of the short term debt instruments used by companies to raise funds. In India these type of instruments are issued by the Government of India. T- bills are zero coupon securities means no interest is paid on these instruments.

These bills are issued at price lower than the par value and redeemed at par value. Thus the difference between par value and purchase price becomes the yield for investors.