Discussion of Owner's Equity

Discussion on Owners Equity

        Stockholders equity represents the owners residual interest in the assets of the stool. It is worried down into two components. Paid-in-capital amounts received from owners for sh bes of the corporations stock. Earned capital, also cognise as hold earnings is the amount of net income bear by the corporation. Paid-in-capital includes stocks accounts, such as, like stock and common stock. Owners of preferred stock generally does not voter turnout, and they will be the original ones to receive dividends when nonrecreational. They are also the first ones to be paid in the event the corporation is liquidated. Owners of common stock are the ones that votes for the board of directors and are the true owners of the corporation.

        It is important for a corporation to keep paid-in-capital and earned capital separate for legal and economical reasons. From the legal standpoint, a corporation can declare dividend go forth of retained earning in all states, but in many a(prenominal) states, dividends cannot be declared out of paid-in-capital. From an economically standpoint, management, stockholders, and others look to retained earnings for the continued existence and growth of the corporation.

        As an investor, I believe that paid-in-capital is more important because as an owner I have certain rights.



I have the right to vote for the directors of the company, to contend in the corporate assets if the corporation is liquidated, to share in the profits and losses and to share in any sore stocks that is issued. As individual owning shares in a corporation I may sell them to others at any time and at any price without obtaining the consent of the company or other stockholder

        Basic earning per share tells an investor how much of the companys profit belongs to each share of stock. Diluted earning per share takes into...

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