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A simple cap table is extremely useful and beneficial for:

* Raising Capital. By generating a cap table, you’ll have an analytical overview of your entire organization. This is to assist in predicting the ownership stakes at a company when going about several rounds of investor financing that inevitably will result in dilution of current shareholders when issuance of new common equity. The spreadsheet is thus useful for such purposes.

* Identifying Owners who own (or may soon own) securities that could dilute the value of the common stock. Most companies issue warrants and common stock holders typically exercise their warrants upon completion of the underlying investment or acquisition of shares of the company’s securities. Because of this potential conflict of interest, most companies avoid making these types of transactions unless they are absolutely required by law or in extreme circumstances.

* Determining the potential amount of dilution of ownership for registered and unregistered shares of stock held by the corporation. Every year the shareholders of a corporation vote on several resolutions. One of these resolutions is referred to as a “qualified majority.” A “qualified majority” resolution requires that a greater number of shareholders than a majority of votes have a positive and binding vote on the matter. This would allow for a second round of voting on the matter if the first one failed to pass a simple majority.

* Determining liquidity. If a company is not worth very much or if it is already near bankruptcy, it may not be liquid enough to provide shareholders with a dividend or capital dividend. As a result, a company’s assets may be relatively worthless and therefore not able to be sold to generate proceeds. A simple cap table comparing the current market value of the company’s shares to its current net tangible assets will help determine whether or not it should be sold to raise funds.

* Capitalization table management. A cap table describes how the value of a company’s outstanding shares of stock is calculated. It shows how many common shares or “common equity” are owned by each class of shareholders. By using this spreadsheet, Captable manager can estimate how much cash a company can raise through a capitalization process and then compare it to its market value. The spreadsheet is then used to compare the net present value of future equity financing versus cash flow from existing debts.

* Option pool. A popular Captable management method is to pool a number of options together that all potential investors may be able to purchase. This allows a company to raise money from a large number of investors without having to sell off all of their shares. The value of each option is then multiplied by the current market price of the shares to determine what amount to pay out to each shareholder.

Simple cap tables are a great way for startups to calculate their liquidity and capitalization needs before they go public. They are also ideal for companies that are considering going into private equity. The value of these types of equity calculations can give startup and new businesses the information they need to make informed decisions. For companies that are already public there are many reasons why the numbers they come up with in their initial financial statements make sense and help guide them as they seek to raise additional capital and raise equity.

There are a number of different ways to use a spreadsheet to calculate liquidity, growth, and other financial ratios for startups . For companies looking to raise capital, these tables provide a great way to determine if they are being priced in a cost effective manner. The spreadsheet can also show founders how much it would cost for them to grow their business in certain ways. This can prove to be invaluable to entrepreneurs who aren’t sure what strategy will work best depending on the circumstances.

The types of securities and valuation multipleples listed in a standard Excel spread sheet include current assets, current liabilities, long term assets, short term assets, funding rounds, intraday trading, and securities list. This information can be combined to give a unique financial performance score for any type of business. This can include growth, PEG ratio, EPS growth rate, return on equity, and market cap. The total number of outstanding common shares is also included to give an accurate picture of where the startup stands in relation to its peers.

The spreadsheet shows how many common shares are currently held by each individual investor. In addition to the shares itself, investors typically own percentages of the company’s outstanding common shares. This information is helpful because it gives people a chance to more accurately calculate the risks associated with particular venture. Simple cap table software is available online that can easily create one-click share buy or sell decisions based on current equity stake.