Capital Base

DEFINITION of 'Capital Base'

1. The capital acquired during an IPO, or the additional offerings of a company, plus any retained earnings.

2. An initial investment plus subsequent investments made by an investor into their portfolio.

BREAKING DOWN 'Capital Base'

1. This is essentially the money contributed by the shareholders who first purchased shares in the company plus retained earnings.

2. Capital base is important because it provides a benchmark when measuring returns. Without it, investors and companies would be unaware of how they are doing relative to their investments.

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RELATED FAQS
  1. How are retained earnings related to a company's income statement?

    Understand what a company's statement of retained earnings represents and how it is related to a company's other financial ... Read Answer >>
  2. How do you calculate retained earnings per share?

    Research the amount of retained earnings per share compared over time to understand whether or not a company uses its profits ... Read Answer >>
  3. What's the difference between retained earnings and revenue?

    See why retained earnings and revenue are both considered important measurements of a company's financial performance, and ... Read Answer >>
  4. How is revenue related to retained earnings?

    Learn what business revenue is and how it relates to retained earnings. See how accountants calculate these key figures and ... Read Answer >>
  5. Which transactions affect the retained earnings statement?

    Retained earnings are the portion of a company's income that management retains for internal operations instead of paying ... Read Answer >>
  6. How can average investors get involved in an IPO?

    An initial public offering, or IPO, is the first sale of stock by a new company, usually a private company trying to go public. ... Read Answer >>
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