# 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 calculator 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.

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## 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 company’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 shareholder’s meetings. While the preferred stock is not the same as it doesn’t give you the right to vote, rather it provides a higher share in the company’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) – SC] – [(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