Month End Glossary

Par Value

Par Value is the nominal or face value of an asset or security such as a bond or a share of stock.

Par Value represents the nominal dollar value of a financial instrument as stated by the issuing entity. For example, corporate bonds typically bear a par value of $1,000, indicating the amount the bondholder will receive upon maturity, assuming the bond is held to its term. Similarly, shares of stock often have a par value, though nowadays the actual market value of shares often surpasses this figure significantly. Companies set par values to establish a baseline or minimum value for their securities. However, for many stocks, the concept of par value has become largely symbolic as market dynamics determine actual valuation. Par Value is also important in accounting, as it determines the initial entry of issued shares on the balance sheet. For instance, if a stock has a par value of $1 and a company issues one million shares, then $1 million will be recorded as the share capital. This value can have no significant relationship to the security's price on the open market but it represents the legal capital below which a company's net assets dare not fall when paying out dividends. Companies issuing bonds use the par value to calculate interest payments, as these are typically based on the par value of bonds owned. As such, Par Value can appear prominently on the financial documents of issuers and in investment contexts.

Related Terms

Make your next Month End easy.
Start your free trial today.

Your first Month End free. We’ll import your existing checklist. It’s 2025 - time to get control of your Month End close process!