1. Cost Calculation Formula
1.1 Cost basis of a stock is calculated based on the average of all purchase, sale, and receiving transferred securities. The specific formula is as follows:
In which:
- Qdn: Securities quantity beginning-of-day before the occurrence of any event that alters the holding securities quantity.
- Pdn: Cost price beginning-of-day before the occurrence of any event that changes the securities quantity
- Qm: Securities quantity increase
- Pm: Price of securities corresponding to each increase in quantity (e.g., Purchase price of the stock, price of received securities, etc.)
- Qb: Securities quantity decrease
- P: Cost price at the time of sale
1.2 Cost price will be adjusted on the ex-rights date according to the following formula:
Rights events of stock dividends/bonus shares
Note: The cost price calculation formula takes the maximum value between the calculated cost and zero. Cost price = 0 in this case will be used as the average cost to continue calculating subsequent transactions that affect the cost price.
In which:
- Qdn: Securities quantity beginning-of-day before the occurrence of any event that alters the holding securities quantity
- Pdn: Cost price beginning-of-day before the occurrence of any event that changes the securities quantity
- Qct: Quantity of securities distributed as stock dividends/bonus shares
Cash dividend event
- Qdn: Beginning-of-day securities quantity
- Pdn: Beginning-of-day cost price of securities
- Cash dividend: Cash dividend received
Right issue
- Qdn: Securities quantity beginning-of-day before the occurrence of any event that alters the holding securities quantity
- Pdn: Cost price beginning-of-day before the occurrence of any event that changes the securities quantity
- Qqm: Quantity of securities subscribed right issue
- Pqm: Issue price
2. Illustrative example
Investor X holds 1,000 shares of VCB in their account at a price of 89,600 VND per share. On February 20, 2025, investor X purchases additional VCB shares with the following matched order details:
Matched 1: Buy 800 VCB shares at 92,200 VND per share
Matched 2: Buy 1,000 VCB shares at 92,300 VND per share
Example 1: The investor only purchases securities during the day
Cost price of VCB in investor X’s account as of February 20, 2025:
Example 2: The investor sells and buys securities on different days
Example 1, Investor X holds 2,800 shares of VCB at a cost price of 91,307 VND per share.
On February 24, 2025, investor X executes a matched sale to sell 1,000 VCB shares for 93,500 VND.
→ Investor X on February 24, 2025, holds 1,800 VCB shares at a cost price of 91,307 VND per share.
On February 25, 2025, investor X buys 200 VCB shares for 93,500 VND per share.
→ The cost price of VCB on February 25, 2025, in investor X's account at this time:
Example 3: The investor both buys and sells securities on the same day (Case of selling all securities)
Continuing Example 2, on February 28, 2025, investor X executed matched with the following details:
Matched 1: Sell 2,000 VCB shares at 96,900 VND per share
Matched 2: Buy 1,000 VCB shares at 94,500 VND per share
Matched 3: Buy 900 VCB shares at 95,800 VND per share
→ The cost price of VCB on February 28, 2025, is calculated sequentially in the order of matched trade times as follows:
Matched 1: P = 0, Q = 0
Matched 2: P = [(0 * 0) + (1,000 * 94,500)] / (0 + 1,000) = 94,500 VND, Q = 1,000
Matched 3: P = [(1,000 * 94,500) + (900 * 95,800)] / (1,000 + 900) = 95,116 VND, Q = 1,900
Example 4: The investor both buys and sells securities on the same day (Case of partially selling securities)
Continuing Example 3, on March 5, 2025, investor X executed a match trade with the following details:
Matched 1: Sell 500 VCB shares at 99,000 VND per share
Matched 2: Buy 200 VCB shares at 97,500 VND per share
Matched 3: Buy 500 VCB shares at 97,200 VND per share
→ The cost price of VCB on March 5, 2025, is calculated sequentially in the order of matched trade times as follows:
Matched 1: P = 95,116 VND, Q = 1,400
Matched 2: P = [(1,400 * 95,116) + (200 * 97,500)] / (1,400 + 200) = 95,414 VND, Q = 1,600
Matched 3: P = [(1,600 * 95,414) + (500 * 97,200)] / (1,600 + 500) = 95,839 VND, Q = 2,100
Example 5: Cost price adjustment on the ex-rights date
Continuing Example 4, investor X holds VCB shares in their account. VCB paying dividends for the year 2024 with the following details:
Ex-rights date: March 6, 2025
Record date: March 7, 2025
Cash dividend rate: 20%
Stock dividend ratio: 100:50 (shareholders owning 100 shares will receive 50 new shares)
Rights offering ratio: 100:30 (shareholders are entitled to 1 right for each share that they own and to buy 30 new shares for every right)
At the start of March 6, 2025, the cost price is adjusted downward to reflect market price dilution in the following order:
Stock dividend event:
Pending stock dividend shares: Qct = 2,100 * 50% = 1,050
Q = 2,100 + 1,050 = 3,150
Cash dividend event:
Amount of dividend = 2,100 * 10,000 * 20% = 4,200,000 VND
Example 6: Cost price adjustment on the record date for subscription rights
Continuing Example 5, investor X holds securities in their account with the following details for the rights offering:
March 6, 2025, is the ex-rights date for VCB's rights offering event with a Right issue ratio of 100:30 and an issue price of 15,000 VND per share.
The rights registration effective date is March 10, 2025.
The rights registration expiration date is March 28, 2025.
→ Quantity of share bought = 2,100 * 30/100 = 630
On March 10, 2025, investor X registered to purchase 630 VCB shares at a price of 15,000 VND per share.
3. Some Notes
The cost price is determined at each point in time, calculated based on the average of purchase and sale transactions within the day, and is influenced by several factors:
- Adjustments based on customer requests: Cost price adjustments can be made at the time of securities custody or transfer of ownership, as well as throughout the holding period.
- Occurrence of rights events: Events such as stock dividends, bonus shares, or exercising rights to purchase additional shares will change the number of shares, leading to adjustments to the average cost price of stock.
The formula for adjusting the stock cost price is based on the calculation principles at PHS. This information is for reference only and is not intended as investment advice.
