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Conversion Price Calculator

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Asset Management Basics of Financial Accounting

✖Par Value is the face value of the convertible bond or preferred share.ⓘ Par Value [PV]			+10% -10%
✖Conversion Ratio refers to the number of shares an investor receives for each convertible bond or preferred share they own when they choose to convert it into common stock.ⓘ Conversion Ratio [CR]			+10% -10%

✖Conversion Price is the price at which the convertible bond or preferred share can be converted into common stock.ⓘ Conversion Price [CP]

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Formula

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Conversion Price

Formula

CP = \frac{PV}{CR}

Example

6 = \frac{30}{5}

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Conversion Price Solution

STEP 0: Pre-Calculation Summary

Formula Used

Conversion Price = Par Value/Conversion Ratio
CP = PV/CR
This formula uses 3 Variables

Variables Used

Conversion Price - Conversion Price is the price at which the convertible bond or preferred share can be converted into common stock.
Par Value - Par Value is the face value of the convertible bond or preferred share.
Conversion Ratio - Conversion Ratio refers to the number of shares an investor receives for each convertible bond or preferred share they own when they choose to convert it into common stock.

STEP 1: Convert Input(s) to Base Unit

Par Value: 30 --> No Conversion Required
Conversion Ratio: 5 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

CP = PV/CR --> 30/5

Evaluating ... ...

CP = 6

STEP 3: Convert Result to Output's Unit

6 --> No Conversion Required

FINAL ANSWER

6 <-- Conversion Price

(Calculation completed in 00.004 seconds)

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Created by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

Vishnu K has created this Calculator and 200+ more calculators!

Verified by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

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< Asset Management Calculators

Amortization of Intangible Assets

Go Amortization Expense = (Historical Cost of Intangible Asset-Residual Value)/Useful Life Assumption

Residual Income

Go Residual Income = Operating Income-Minimum Required Rate of Return*Average Operating Assets

Net Capital Spending

Go Net Capital Spending = Ending Net Fixed Assets-Beginning Net Fixed Assets+Depreciation

Internal Growth Rate

Go Internal Growth Rate = Retention Ratio*Return on Assets

Conversion Price Formula

Conversion Price = Par Value/Conversion Ratio
CP = PV/CR

What is Conversion Price?

Conversion Price is the price per share at which the bond or preferred share can be exchanged for common stock.The conversion price is a crucial factor for investors to consider because it determines the cost basis for converting the convertible security into common stock. If the market price of the common stock is higher than the conversion price, the conversion is said to be "in-the-money," meaning it would be advantageous for the investor to convert. Conversely, if the market price is below the conversion price, the conversion would be "out-of-the-money," and it might not be beneficial for the investor to convert.

It's worth noting that the conversion price can also be adjusted over time due to events like stock splits, dividends, or other corporate actions as specified in the terms of the convertible security. Investors should always refer to the offering documents or prospectus for accurate information on the conversion terms and potential adjustments to the conversion price.

How to Calculate Conversion Price?

Conversion Price calculator uses Conversion Price = Par Value/Conversion Ratio to calculate the Conversion Price, The Conversion Price is the predetermined price at which the security can be converted into a set number of shares of common stock. Conversion Price is denoted by CP symbol.

How to calculate Conversion Price using this online calculator? To use this online calculator for Conversion Price, enter Par Value (PV) & Conversion Ratio (CR) and hit the calculate button. Here is how the Conversion Price calculation can be explained with given input values -> 6 = 30/5.

FAQ

What is Conversion Price?

The Conversion Price is the predetermined price at which the security can be converted into a set number of shares of common stock and is represented as CP = PV/CR or Conversion Price = Par Value/Conversion Ratio. Par Value is the face value of the convertible bond or preferred share & Conversion Ratio refers to the number of shares an investor receives for each convertible bond or preferred share they own when they choose to convert it into common stock.

How to calculate Conversion Price?

The Conversion Price is the predetermined price at which the security can be converted into a set number of shares of common stock is calculated using Conversion Price = Par Value/Conversion Ratio. To calculate Conversion Price, you need Par Value (PV) & Conversion Ratio (CR). With our tool, you need to enter the respective value for Par Value & Conversion Ratio and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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