The Effect of the Shares resulting from the Capital Increase

Capital of company issuance of new shares in addition to existing shares. There are disadvantages and advantages to the increase of capital. With Pimaccounting, you will learn about how you can achieve the benefits and how to be in the most effective route for your business success.

 

  1. Share Dilution An increase in the capital assigned to a new investor causes the existing investor's holdings to decrease. For example, a company has 100 million shares, holding 5%. If the company raises another 50 million shares for new investors The old shareholder's stake is immediately reduced to 3.33%.
  2. Earning-per-Share Impact Capital increase is adding people to share the company's profits. The profit of the company remains the same Earnings per share will decrease.
  3. Stock Price Impact As a result of lower earnings per share. The share price also tends to fall. If investors do not increase capital as requested by the company, it will lose benefits.

Find out more at: 

https://pimaccounting.com/blog/th/blog-th/42-understand-the-capital-increase-and-the-purpose-of-the-capital-increase 

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