Question

Exercise 3-10 capital stock is a major part of a company's equity. the term capital stock includes both and preferred stock.what is needed:a. identify the basic rights inherent in ownership of ordinary shares and explain how the owner uses it.b. explain preferred stock. discuss the various preferences that are often given preferred shares.c. in the analysis and interpretation of a company's equity securities, it is important to understand with certainty the terminology. define and describe the following equity items:(1) treasury shares (2) share rights (3) share warrants

Answer 1

Answer:

Sourcing money may be done for a variety of reasons. Traditional areas of need may be for capital asset acquirement - new machinery or the construction of a new building or depot. The development of new products can be enormously costly and here again capital may be required. Normally, such developments are financed internally, whereas capital for the acquisition of machinery may come from external sources. In this day and age of tight liquidity, many organisations have to look for short term capital in the way of overdraft or loans in order to provide a cash flow cushion. Interest rates can vary from organisation to organisation and also according to purpose.