Capital Stock


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Related to Capital Stock: issued capital stock

Capital Stock

All shares constituting ownership of a business, including common stock and preferred stock. The amount of shares that a corporate charter requires to be subscribed and paid, or secured to be paid, by shareholders. The amount of stock that a corporation may issue; the amount actually contributed, subscribed, or secured to be paid on. The liability of the corporation to its shareholders after creditors' claims have been settled. The valuation of the corporation as a business enterprise.

Capital stock is distinguishable from the property and assets of the corporation. The property of a corporation fluctuates and may be greater or less than the original capital invested, but the capital stock remains intact and unaffected by the vicissitudes of business.

Undivided profits, or surplus, are not part of the capital stock, although they are included in the general capital or assets of the corporation.

The capital stock of a corporation serves only corporate purposes. It functions as security for the creditors of the corporation who have relied on its existence, since it cannot be diverted or withdrawn to the detriment of corporate creditors. Capital stock is sometimes regarded as a trust fund.

capital stock

n. the original amount paid by investors into a corporation for its issued stock. Capital stock bears no direct relationship to the present value of stock, which can fluctuate after the initial issue or first stock offering. Capital stock also does not reflect the value of corporate assets, which can go up or down based on profits, losses, or purchases of equipment. Capital stock remains as a ledger entry at the original price.

References in periodicals archive ?
It is well known that erecting barriers to the free flow of goods and services across national borders undermines the division of labor and standards of living by impeding the adjustment of the capital stock to its most productive uses.
This research developed a measure of actual capital discards by deflating historical dollar gross book value data to obtain gross book value capital stock measures.
Because of the important theoretical and empirical differences between capacity output and capital input, the Federal Reserve uses the capital stock figures only to refine year-to-year movements in its capacity estimates and only when physical capacity data have not been compiled.