What are the types of Equity Capital?

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Saurabh Guptahttp://karekaise.in
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What are the types of Equity Capital?

There are 5 types of equity capital or share capital-

  1. Authorized Capital:

This is the maximum capital, more than which the company cannot use in its entire life time. And if she wants to do it, then she will have to take the permission of the government and the permission of the shareholder will be required, which is a lot of frills.


  1. Issued or Unissued Capital:

The amount of shares that the company issues to the investors, that amount is called Issued Capital and the value of the remaining shares is called Unissued Capital.


  1. Subscribed or Unsubscribed Capital:

If the number of shares issued by the company is not necessary and if the entire shares are sold, then the amount of shares people buy and the money they get is called subscribed capital and the amount of the remaining share is called Unsubscribed Capital is considered.


  1. Called up or Uncalled Capital:

Although every company brings IPO these days, all the shares it has issued get all the money from the public, but some companies get money in different parts like some money while applying for IPO, some money While depositing, then after that some money is called on first call and last call, then the company that has ordered this money is called Called up capital and the remaining amount is called Uncalled Capital.


  1. Paid-up or Unpaid Capital:

Called up capital is called paid-up capital but many times the company does not get the full amount. In this situation, the money that the company gets out of the called up capital is called paid-up capital and the money that the company does not get is called unpaid capital.

What is the difference between Equity Capital and Debt Capital?

In debt capital, companies raise money through loans on which they have to pay interest and while in equity capital, companies raise money by selling their common stock or preferred shares in which they have to give a stake in the company to the shareholder.

What does it mean for equity capital to be negative or positive?

If the equity capital in the company’s balance sheet is positive, it means that the company has more assets than its liability, but if the equity capital is negative, the company’s liability is more than its assets.

Where is Equity Capital Used?

The company uses this capital to expand its business. Makes new innovations and expansions and generates profit, which increases the price of the stock and benefits the shareholder.

How to Calculate Equity Capital?

The formula to calculate equity capital is:

Equity Share Price × Number of Equity Shares

In what ways do companies raise equity capital?

The company raises equity capital in these 5 ways

  • Self Funding
  • By friends and relatives
  • By Private Investors
  • Venture Capitalist
  • By listing on the stock market.


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