Equity Financing

These flashcards cover key terms and concepts related to equity financing, focusing on stock types, their effects on financial statements, and the implications of issuing and re-acquiring shares.

Equity Financing

The method of raising capital through the sale of shares.

Common Stock

A type of security that represents ownership in a company and entitles shareholders to vote on corporate matters.

Preferred Stock

A type of stock that provides dividends before common stockholders receive theirs and usually has no voting rights.

Authorized Shares

The total number of shares a company is allowed to sell to the public.

Issued Shares

The total number of shares that have been sold to the public.

Outstanding Shares

The shares that are currently held by shareholders, excluding shares held as treasury stock.

Treasury Stock

Stock that has been re-acquired by the issuing company and is held in its treasury.

Net Income Impact of Stock Transactions

Transactions involving our own stock do not affect the income statement or net income.

Impact on Balance Sheet from Issuing Stock

Increases assets (cash received) and increases equity (common stock and paid-in capital).

Financing Cash Inflow

The cash received by a company as a result of issuing stock.