Conversion Ratio

Conversion Ratio - The conversion ratio are the total number of shares of common stock that can be collected, and obtained by converting individual shares of a convertible security. A convertible security are any bonds debentures, or proffered stock that are exchangeable for common stock , though the option policy for the shareholder The formula for getting the conversion ratio is the following , the conversion ratio is equal too the Parr value of the convertible bond, divided by the conversion price of equity. The higher the ratio, the higher number of common shares and the higher the numbers exchanged per convertible security.