STOCKS AND BOND FINANCING

Financing thru Stocks
In the previous chapter we have learned that stocks are the owned capital of a business and that it is considered a permanent investment. We have also learned that people who invest in stocks are called stockholders and their ownership in the corporation is evidenced by a stock certificate. Stocks as we have seen may be obtained from the corporation either thru subscription, purchase and the issuance of stocks dividends.

The shares of stocks are supposed to earn dividends for the owners. The Board of directors should see to it that the corporation earns profits and grow through the years.

Stock Financing refers to the procurement of corporate funds through the sales of shares of stocks to prospective investors.

AUTHORIZED CAPITAL STOCK, CAPITAL; AND CAPITALIZATION
Authorized Capital Stock is the total amount of stocks of all classes authorized in the certificate of incorporation.
Capital Stock represents the actual amount of stocks of all classes which are issued and outstanding at any time and not necessary the total amount of authorized capital stock, a large part of which is un-issued.
Capital depends on whose point of view it is being defined. To the accountant, capital refers to the total ownership of the business which obtained by deducting the total liabilities from the total assets.
Capitalization refers to the sum of the face or par value of all outstanding stocks and bonds issued by the corporation.
Un-issued Stocks this is a portion of the authorized capital stock which have not yet been subscribed and remains in the corporation.
Issued Capital Stock this refer to the stock already issued and outstanding.
Outstanding Stocks this refers to all issued and subscribed stocks which may be fully paid or partly paid which are held by stockholder other than the issuing corporation.
Treasury