Capital Base

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.

Notes:

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.

See also: Capital, Retained Earnings, Return on Assets, ROE, ROI