Which statement best describes paid-in-capital?

Paid-in capital refers to the amount of capital that a company receives from investors in exchange for stock. Specifically, it includes the portion of money that investors pay above the stock's par value. When a company issues shares, the par value is the nominal or face value, and any excess amount that investors pay beyond this value gets classified as additional paid-in capital. This is integral to understanding the company's equity structure as it distinguishes the funds contributed by shareholders from other components of equity, such as retained earnings.

The other choices address concepts related to equity and finance but do not accurately define paid-in capital. For instance, retained earnings, mentioned in the first option, are profits not distributed as dividends but reinvested in the business. Cash flows from operations, referenced in another choice, pertain to the cash generated from a company's core business activities and are not included in paid-in capital. Finally, the market value of outstanding shares relates to the current trading price of the shares and does not reflect the paid-in capital, which is based on the amount received from shares at issuance.