Friday, June 14, 2024

What is a stock calculator and why we need it?

No matter if you step into the stock market as a professional trader or being a newbie, a stock calculatorÂ will be there for you to assist. Using the purchase stock price and selling price, a stock calculator finds out the stock return or it will let you know the amount of money you will be earning on your transactions. Moreover, a stock profit calculator will provide you two parameters of great importance: one is the return on investment (ROI) and the break-even price. It is better for the one who is interested in stock investment and trading to also check out the earnings per share calculator.

Contents

What are Stocks?

Stocks are certificated that entitle you to partially own a given company. For instance, if a company issues 100 shares of stock outstanding and you would buy 10 shares, you would be entitled to 10% of the companyâ€™s assets and earnings.

Stocks give you ownership of the company. Usually, there are two major types of stocks, common stock and preferred stock. Common stock provides you with the voting right at shareholderâ€™s meetings. While the preferred stock is not the same as it doesnâ€™t give you the right to vote, rather it provides a higher share in the companyâ€™s assets.

How is the stock price determined?

At the time, when a company enters the market, it has to go through the valuation process during an Initial Public Offering (IPO). Then the total value of the company is estimated. Dividing this total value by the number of issued stocks will let you know the price of a single share. The stock prices usually keep fluctuating as per the principles of supply and demand. For instance, if the demand is too high, the prices will certainly be sky-high.

How to calculate the stock profit?

The main idea behind this stock return calculator is that you buy stocks when they are cheap, and sell them once their value increases. The profit is the difference between the expenses and revenue. You can calculate it according to the following formula:

The working principle behind this stock return calculator is that one buys stocks when they are cheap and then cells them when their value becomes high. The difference between the expenses and revenues is the profit you receive. Stock profit can be calculated using the given formula:

Profit = [(SP * No) â€“ SC] â€“ [(BP * No) + BC]

where:

SP is the selling stock price,

No represents the number of stocks you trade,

SC stands for selling commission that you have to pay,

BP denotes buying stock price, while

Expressed both as fixed monetary values and as a percentage of the price, this stock investment calculator accepts commissions. Once you type in one of these two values, the other one will be calculated automatically.

Is stock investment a good idea?

Knowing important details regarding stock profit, you can now understand how wise it would be to invest in the socks. However, many other indicators can help you determine the profitability of your investment such as ROI â€“ Return on Investment which gives a percentage of the initial investment that will return to you as a profit.

Lindsey Ertz
Lindsey, a curious soul from NY, is a technical, business writer, and journalist. Her passion lies in crafting well-researched, data-driven content that delivers authentic information to global audiences, fostering curiosity and inspiration.