3.20What is face value?
1What is it?
Face value (FV) or par value is the original nominal value of a share written in the company’s records, often ₹1, ₹2, ₹5 or ₹10.
2Why does it exist?
It is used for accounting and for declaring dividends as a % of face value. It has nothing to do with the market price.
3Stock market example
If a company with FV ₹2 declares a "500% dividend", that means 500% × ₹2 = ₹10 per share, not 500% of the market price.
4Calculation
Dividend per share = Dividend % × Face value
- FV ₹1, dividend 1,500%
- 15 × ₹1 = ₹15
₹15 per share.
5Quick revision
- FV = nominal accounting value.
- Not related to market price.
- Dividend % is quoted on FV.
6Knowledge check
Q1. FV ₹10, dividend 50%. Dividend per share?Show answer
₹5.
Q2. Does FV tell you if a share is cheap?Show answer
No.
Q3. What happens to FV in a stock split?Show answer
It reduces.