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Thread: What is the difference between equity and stocks?

  1. #1
    Junior Member wertyhas's Avatar
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    Default What is the difference between equity and stocks?

    Hi, I would like to know the difference between equity and stocks.

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    Junior Member siodettor's Avatar
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    Posted August 24, 2020
    Hello, thank you for your question!



    The difference between equity and stock is that all types of stocks are equity, not all types of equity are stocks. Equity consists of all the investments and earnings made by the owners, while stocks are just a way through which owners establish an equity stake in a certain company.

    Things that fall under equity are:

    The common stocks-which give someone an ownership stake in the company,
    The preferred stocks-which make sure that when earnings fall, those who have the preferred stocks are paid first,
    The retained earnings-when the company has a certain amount of earnings it can choose to issue dividends to stockholders or keep that amount for future needs,
    The contributed surplus-corporations issue stock which can be valued at $1 or less, which investors can buy at a higher price and excess is listed as contributed surplus,
    The treasury stock-is the stock that the company has purchased back from the customers.

    Share capital can be another name for the money invested into the company by stockholders, the difference between equity and share capital is that share capital doesn’t include retained earnings, while equity does.

    In conclusion, equity is capital invested in the company by owners, while shares are the division of this wealth between the owners and shareholders. Equity refers to the value of the business, while shares or stocks refer to the amount of involvement in the business.

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    Junior Member Shikari's Avatar
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    The two terms "equity" and "stock" are closely related in that they both represent the capital or ownership interest owned by a company or asset. Equity is a form of capital invested in a business or an asset representing ownership of a business. Stocks are part of the capital investment made by an investor in a publicly-traded firm. Equity can refer to the ownership interest held by shareholders in the firm or to an interest in an asset, such as property, building, or home. Stocks are portions of a company's capital (or ownership) sold to the general public. (you can learn more on https://pennystocks.today/ if this information is not enough for you).

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