Recall that debt (on the liabilities side of the balance sheet) represents one major source of funds for companies. Shareholders’ equity represents another major source of funds (Exhibit 6.19) via:
Issuance of equity
Operations
Preferred Stock | Stock that has special rights and takes priority over common stock |
Common Stock Par Value | Par value of units of ownership of a corporation |
Additional Paid-In Capital (APIC) | Represents capital received by a company when its shares are sold above their par value |
Treasury Stock | Common stock that had been issued and then reacquired (bought back) by a company |
Retained Earnings | Total amount of earnings of a company since its inception minus dividends and losses (if any) |