Capital stock means the common as well as preferred shares which a company can issue as per its articles of association. It is the authorised share capital of a company that it is permitted to issue to the public. Outstanding shares are part of the Capital stock of the company.
Features of Capital Stock are:
a) The number of shares a company can issue as decided by its Board of Directors.
b) The company keeps a record of all its shareholders.
c) A company’s Capital stock is valued at the Face value of shares issued. Face value or Par value is assigned at the time of issuance of shares.
Some uses of Capital Stock are:
a) Capital stock is issued for raising funds.
b) It does not increase the debt but can be used for business expansion.
c) In the process of issuing Capital Stock, a company dilutes its stake.
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