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Equity


Equity Shares 

They are categorized under long-term sources of finance because legally they are irredeemable in nature. For an investor, these shares are a certificate of ownership in the company by virtue of which investors are entitled to share the net profits and have a residual claim over the assets of the company in the event of liquidation.

Various Prices of Equity Shares:
- Par or Face Value
- Issue Price
- Share Premium and Share at Discount
- Book Value
- Market Value

Types of Equity Shares:
- Authorized Share Capital
- Issued Share Capital
- Subscribed Share Capital
- Paid-up Capital
- Rights Share
- Bonus Share
- Sweat Equity Share 

Equity Share Investment

Advantages:
- Dividend
- Capital Gain
- Limited Liability
- Exercise Control
- Right Shares
- Bonus Shares
- Liquidity
- Stock Split

Disadvantages:

- Dividend is not fixed/controllable
- High Risk
- Fluctuation in market price
- Limited control
- Residual Claim 

Equity Financing refers to raising capital by giving away some "ownership" of the company. The firms generally raise equity finance by selling the common stock of the company to a closed group or the public at large. The possession of such stocks is what represents "ownership" of the company or part thereof. 

Advantages:

- Permanent Capital
- No Fixed Charge
- Collateral Free
- Better Credit Standing
- Funds disposable at the discretion of the board




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