Additional Paid In Capital
What it is:
How it works (Example):
Let's assume that Company XYZ decides it needs to raise $10 million inin order to build a new factory. It does this by issuing 100,000 of new at $10 per share.
The company records the receipt of $10 million of offering is complete. It also records the additional corresponding on the . However, it breaks that $10 million up into two line items: the of the and anything over the of the stock.on the side of its after the
Traditionally, companies assign an arbitrary paid-in capital (APIC). As this snippet from a Walmart shows, the company had almost $4 billion of APIC (dollars below are in millions).of $0.01 to each new share of stock. Anything over that, $9.99 in our example, is recorded as additional
Why it Matters:
Additional paid-in capital reveals how much investors have poured into the company. That's not something anybody can see on the income statement or the cash flow statement, but it's important if you want to know how much shareholders have paid to play and want to ponder whether management has used that wisely.