Some states require a company to designate a stated value for each share of stock. Like par value, stated value is the legal capital of the stock that remains on the company’s balance sheet. A company uses stated value or par value to calculate dividends on preferred stock, which has priority in receiving dividends before common stock. If the preferred stock is non-cumulative, a company is not required to pay past dividends if it misses a dividend payment. You can calculate the stated value of non-cumulative preferred stock using information from a company’s balance sheet.
1. Look for a company’s balance sheet in either its 10-Q quarterly filing or in its 10-K annual filing. You can obtain these filings from the investor relations section of its website or from the U.S. Securities and Exchange Commission’s EDGAR online database.
2. Identify the dollar amount of the “Preferred Stock” line item, listed in the stockholders’ equity section of the balance sheet. For example, assume the company’s balance sheet shows $100,000 in preferred stock.
3. Find the number of shares issued of preferred stock, listed in the description of the same line item. In this example, assume the company has 2,000 shares issued of preferred stock.
4. Divide the dollar amount of preferred stock by the number of shares issued to calculate the stated value per share of preferred stock. In this example, divide $100,000 in preferred stock by 2,000 shares issued to get a $50 stated value per share of preferred stock.