Additional Paid-In Capital

Additional paid-in capital (APIC) is the portion of a company's capital that is raised through the sale of shares of stock above the par value of those shares. The par value is the nominal value of a share of stock, which is typically set at a low amount, such as $0.01 or $1.00. The APIC is the amount of money that investors have paid above the par value of the shares they have purchased.

APIC is an important concept in corporate finance because it represents the amount of equity that has been contributed by shareholders. This equity can be used to fund a company's operations, pay dividends to shareholders, or repurchase shares of stock.

There are two main types of APIC:

• Capital surplus: This is the amount of money that investors have paid above the par value of the shares they have purchased.
• Treasury stock: This is the amount of money that a company has paid to repurchase its own shares of stock.

Capital surplus and treasury stock are both considered to be part of APIC because they represent equity that has been contributed by shareholders. However, there are some important differences between the two types of APIC.

Capital surplus is created when a company issues new shares of stock at a price that is higher than the par value of those shares. This can happen when there is a high demand for a company's stock, or when a company wants to raise capital quickly.

Treasury stock is created when a company repurchases its own shares of stock. This can happen for a variety of reasons, such as to reduce the number of shares outstanding, to boost the stock price, or to use as a source of capital.

The APIC is an important concept in corporate finance because it represents the amount of equity that has been contributed by shareholders. This equity can be used to fund a company's operations, pay dividends to shareholders, or repurchase shares of stock.