Pin It

Difference between Stocks, Shares and Equity

More details:

Shares: No. of units into which capital of company is divided.
Example: If paid up capital of company is Rs. 100,000, it can distribute 1000 shares of Rs. 10 each.
They have a nominal value and can be paid partly / fully.
Shares always have equal denomination
Asset in the form of cash reserve that may be divided into any desirable figure.
Example: company receives Rs. 100,000 as external investment and decides to keep Rs. 50,000 separately for issuing stock options to employees (ESOPs). It can issue 50,000 stocks of Rs. 1 each, 100,000 stocks of Rs. 0.50 each, 1000 stocks of Rs. 50 each, or any other amount in any combination [1000 stocks of Rs. 20 each and 2000 stocks of Rs. 30 each].
Do not have nominal value and are fully paid.
Can be split into unequal amounts
Definition: represents ownership in any asset after all debts are paid off
Generally represents ownership interest
Accounted by issuing shares of common stocks and since transferring of stocks is taxable, employees are given options to buy in future at pre-decided price, commonly known as ESOPs
Difference between Stocks, Shares and Equity

Leave a Reply

Your email address will not be published. Required fields are marked *