Ordinary share

An ordinary share is the basic unit of equity ownership in a company, carrying one vote per share and a residual claim on profits and assets after debt holders and preference shareholders are paid first.

ByHoang TruongUpdated July 11, 2026

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A company is wound up with assets sold for €2,400,000. Creditors are paid €1,500,000 and preference shareholders €300,000, leaving €600,000 for ordinary shareholders — the residual claim. Across 200,000 ordinary shares, that is €600,000 ÷ 200,000 = €3.00 per share, the last amount paid in the liquidation order.

Where it fits

SubjectCorporate FinanceCoreTopicCapital Structure & LeverageCoreTopicBond & Equity ValuationCore

The formula

LaTeX

V_{share} = \frac{A - L - P}{N}

Variables

$A$: Total assets (€)
$L$: Liabilities (debt) (€)
$P$: Preference share claims (€)
$N$: Number of ordinary shares (shares)

The amount each ordinary share would receive if the company's assets were liquidated and all higher-ranking claims were paid first.

Check yourself

PracticeCORE

A company is liquidated. Its assets are sold for €5,100,000. It owes creditors €3,200,000 and owes its preference shareholders €400,000. There are 100,000 ordinary shares outstanding. How much does each ordinary share receive?

Select an answer to check your understanding.