You can choose from among three alt

You can choose from among three alternatives to determine the cost of internal or equity capital.
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the cost of internal or equity capital can determine from three alternatives as following

Although both common stock and retained earnings contribute toward the equity of a

company, they are different sources of equity and affect a company's equity differently

and independently. The source of equity from common stock is stock traded on a stock

exchange, while the source of equity from retained earnings is income generated from

services and/or products. Owner's financing will have a direct effect on the company's equity, but may or may not have an indirect effect on other portions of the owner's equity. Reinvesting earnings into a company by establishing or increasing retained earnings will also have a direct effect on the company's equity, but may or may not have an indirect effect on other portions of the owner's equity. As such, they are independent equity accounts and inherently different.



Read more : http://www.ehow.com/info_8760095_differences-stock-equity-retained-earnings.html



Ordinary shares are issued to the owners of a company. They have a nominal or 'face' value, typically of $1 or 50 cents. The market value of a quoted company's shares bears no relationship to their nominal value, except that when ordinary shares are issued for cash, the issue price must be equal to or be more than the nominal value of the shares.

Deferred ordinary shares

are a form of ordinary shares, which are entitled to a dividend only after a certain date or if profits rise above a certain amount. Voting rights might also differ from those attached to other ordinary shares.

Ordinary shareholders put funds into their company:

a) by paying for a new issue of shares
b) through retained profits.
Simply retaining profits, instead of paying them out in the form of dividends, offers an important, simple low-cost source of finance, although this method may not provide enough funds, for example, if the firm is seeking to grow.

A new issue of shares might be made in a variety of different circumstances:

a) The company might want to raise more cash. If it issues ordinary shares for cash, should the shares be issued pro rata to existing shareholders, so that control or ownership of the company is not affected? If, for example, a company with 200,000 ordinary shares in issue decides to issue 50,000 new shares to raise cash, should it offer the new shares to existing shareholders, or should it sell them to new shareholders instead?
i) If a company sells the new shares to existing shareholders in proportion to their existing shareholding in the company, we have a rights issue. In the example above, the 50,000 shares would be issued as a one-in-four rights issue, by offering shareholders one new share for every four shares they currently hold.
ii) If the number of new shares being issued is small compared to the number of shares already in issue, it might be decided instead to sell them to new shareholders, since ownership of the company would only be minimally affected.

b) The company might want to issue shares partly to raise cash, but more importantly to float' its shares on a stick exchange.

c) The company might issue new shares to the shareholders of another company, in order to take it over.

For any company, the amount of earnings retained within the business has a direct impact on the amount of dividends. Profit re-invested as retained earnings is profit that could have been paid as a dividend. The major reasons for using retained earnings to finance new investments, rather than to pay higher dividends and then raise new equity for the new investments, are as follows:

a) The management of many companies believes that retained earnings are funds which do not cost anything, although this is not true. However, it is true that the use of retained earnings as a source of funds does not lead to a payment of cash.
b) The dividend policy of the company is in practice determined by the directors. From their standpoint, retained earnings are an attractive source of finance because investment projects can be undertaken without involving either the shareholders or any outsiders.

c) The use of retained earnings as opposed to new shares or debentures avoids issue costs.

d) The use of retained earnings avoids the possibility of a change in control resulting from an issue of new shares.

Another factor that may be of importance is the financial and taxation position of the company's shareholders. If, for example, because of taxation considerations, they would rather make a capital profit (which will only be taxed when shares are sold) than receive current income, then finance through retained earnings would be preferred to other methods.

A company must restrict its self-financing through retained profits because shareholders should be paid a reasonable dividend, in line with realistic expectations, even if the directors would rather keep the funds for re-investing. At the same time, a company that is looking for extra funds will not be expected by investors (such as banks) to pay generous dividends, nor over-generous salaries to owner-directors.

Results (English) 1:

You can choose from among three alternatives to determine the cost of internal or equity capital.You can choose from three options to determine the cost of capital within the capital. As follows:the cost of internal or equity capital can determine from three alternatives as following Although both common stock and retained earnings contribute toward the equity of acompany, they are different sources of equity and affect a company's equity differentlyand independently. The source of equity from common stock is stock traded on a stockexchange, while the source of equity from retained earnings is income generated fromservices and/or products. Owner's financing will have a direct effect on the company's equity, but may or may not have an indirect effect on other portions of the owner's equity. Reinvesting earnings into a company by establishing or increasing retained earnings will also have a direct effect on the company's equity, but may or may not have an indirect effect on other portions of the owner's equity. As such, they are independent equity accounts and inherently different.Read more : http://www.ehow.com/info_8760095_differences-stock-equity-retained-earnings.htmlOrdinary shares are issued to the owners of a company. They have a nominal or 'face' value, typically of $1 or 50 cents. The market value of a quoted company's shares bears no relationship to their nominal value, except that when ordinary shares are issued for cash, the issue price must be equal to or be more than the nominal value of the shares.Deferred ordinary sharesare a form of ordinary shares, which are entitled to a dividend only after a certain date or if profits rise above a certain amount. Voting rights might also differ from those attached to other ordinary shares.Ordinary shareholders put funds into their company:a) by paying for a new issue of sharesb) through retained profits.Simply retaining profits, instead of paying them out in the form of dividends, offers an important, simple low-cost source of finance, although this method may not provide enough funds, for example, if the firm is seeking to grow.A new issue of shares might be made in a variety of different circumstances:a) The company might want to raise more cash. If it issues ordinary shares for cash, should the shares be issued pro rata to existing shareholders, so that control or ownership of the company is not affected? If, for example, a company with 200,000 ordinary shares in issue decides to issue 50,000 new shares to raise cash, should it offer the new shares to existing shareholders, or should it sell them to new shareholders instead?i) If a company sells the new shares to existing shareholders in proportion to their existing shareholding in the company, we have a rights issue. In the example above, the 50,000 shares would be issued as a one-in-four rights issue, by offering shareholders one new share for every four shares they currently hold.ii) If the number of new shares being issued is small compared to the number of shares already in issue, it might be decided instead to sell them to new shareholders, since ownership of the company would only be minimally affected.b) The company might want to issue shares partly to raise cash, but more importantly to float' its shares on a stick exchange.c) The company might issue new shares to the shareholders of another company, in order to take it over.For any company, the amount of earnings retained within the business has a direct impact on the amount of dividends. Profit re-invested as retained earnings is profit that could have been paid as a dividend. The major reasons for using retained earnings to finance new investments, rather than to pay higher dividends and then raise new equity for the new investments, are as follows:a) The management of many companies believes that retained earnings are funds which do not cost anything, although this is not true. However, it is true that the use of retained earnings as a source of funds does not lead to a payment of cash.b) The dividend policy of the company is in practice determined by the directors. From their standpoint, retained earnings are an attractive source of finance because investment projects can be undertaken without involving either the shareholders or any outsiders.c) The use of retained earnings as opposed to new shares or debentures avoids issue costs.d) The use of retained earnings avoids the possibility of a change in control resulting from an issue of new shares.Another factor that may be of importance is the financial and taxation position of the company's shareholders. If, for example, because of taxation considerations, they would rather make a capital profit (which will only be taxed when shares are sold) than receive current income, then finance through retained earnings would be preferred to other methods.A company must restrict its self-financing through retained profits because shareholders should be paid a reasonable dividend, in line with realistic expectations, even if the directors would rather keep the funds for re-investing. At the same time, a company that is looking for extra funds will not be expected by investors (such as banks) to pay generous dividends, nor over-generous salaries to owner-directors.

Results (English) 2:

You can choose from among three alternatives to determine the cost of internal or equity capital.
You can choose from three options to determine the cost of internal funds or capital, as
the cost of internal or Equity Capital Can Determine from Three Alternatives As following Although both. common Stock and retained Earnings Contribute toward the Equity of a Company, they are different Sources of Equity and affect a Company's Equity differently and independently. The Source of Equity from common Stock is Stock traded on a Stock Exchange, while the Source of Equity from retained. Earnings is income Generated from Services and / or products. Owner's Financing Will have a Direct Effect on the Company's Equity, but May or May not have an indirect Effect on Other Portions of the owner's Equity. reinvesting Earnings into a Company by establishing or increasing retained. Earnings Will also have a Direct Effect on the Company's Equity, but May or May not have an indirect Effect on Other Portions of the owner's Equity. As such, they are Independent Equity accounts and inherently different. Read More: HTTP: // www. Ehow.com/info_8760095_differences-stock-equity-retained-earnings.html Ordinary shares are issued to the owners of a Company. They have a nominal or 'Face' value, typically of $ 1 or 50 cents. The market value of a quoted Company's. shares bears no Relationship to their nominal value, except that when ordinary shares are issued for Cash, the Issue Price must be Equal to or be More than the nominal value of the shares. Deferred ordinary shares are a form of ordinary shares, which are Entitled. to a dividend only after a certain date or if Profits rise above a certain amount. Voting rights Might also differ from those attached to Other ordinary shares. Ordinary shareholders Put Funds into their Company: a) by Paying for a New Issue of shares B). Through retained Profits. Simply Retaining Profits, instead of Paying them out in the form of Dividends, offers an important, Simple low-cost Source of Finance, Although this method May not provide Enough Funds, for example, if the Firm is seeking to Grow. . A New Issue of shares Might be Made in a Variety of different circumstances: a) The Company Might Want to Raise More Cash. If it issues ordinary shares for Cash, should the shares be issued Pro Rata to existing shareholders, so that Control or. ownership of the company is not affected? If, for example, a company with 200,000 ordinary shares in issue decides to issue 50,000 new shares to raise cash, should it offer the new shares to existing shareholders, or should it sell them to new shareholders instead. ? I) If a Company sells the New shares to existing shareholders in proportion to their existing Shareholding in the Company, we have a rights Issue. In the example above, the 50,000 shares would be issued As a one-in-Four rights Issue,. by offering shareholders one New share for Every Four shares they currently Hold. II) If the Number of New shares being issued is Small compared to the Number of shares already in Issue, it Might be decided instead to sell them to New shareholders, since Ownership. of the Company would only be minimally affected. B) The Company Might Want to Issue shares partly to Raise Cash, but More importantly to float 'ITS shares on a Stick Exchange. C) The Company Might Issue New shares to the shareholders of another Company. , in Order to take it over. For any Company, the amount of Earnings retained Within the business has a Direct Impact on the amount of Dividends. Profit re-invested As retained Earnings is profit that could have been paid As a dividend. The Major. Reasons for using retained Earnings to Finance New Investments, rather than to pay Higher Dividends and then Raise New Equity for the New Investments, are As follows: a) The Management of many companies believes that retained Earnings are Funds which do not cost anything, Although. this is not True. However, it is True that the use of retained Earnings As a Source of Funds does not Lead to a payment of Cash. B) The dividend Policy of the Company is in Practice determined by the Directors. From their standpoint,. retained Earnings are an attractive Source of Finance because Investment Projects Can be undertaken without involving either the shareholders or any Outsiders. C) The use of retained Earnings As opposed to New shares or Debentures avoids Issue costs. D) The use of retained Earnings avoids the. possibility of a Change in Control resulting from an Issue of New shares. Another factor that May be of importance is the Financial and taxation position of the Company's shareholders. If, for example, because of taxation Considerations, they would rather Make a Capital profit (. which Will only be taxed when shares are SOLD) than receive current income, then Finance Through retained Earnings would be Preferred to Other methods. A Company must restrict ITS self-Financing Through retained Profits because shareholders should be paid a reasonable dividend, in line with. realistic expectations, even if the directors would rather keep the funds for re-investing. At the same time, a company that is looking for extra funds will not be expected by investors (such as banks) to pay generous dividends, nor over-generous. salaries to owner-directors.

Results (English) 3:

You can choose from among three alternatives to determine the cost of internal or equity capital.
you can choose from three options to determine the cost of funds within or capital. :
the cost of internal or equity capital can determine from three alternatives as following

.Although both common stock and retained earnings contribute toward the equity of a

company they are, different sources. Of equity and affect a company 's equity differently

and independently. The source of equity from common stock is stock. Traded on a stock

exchange while the, source of equity from retained earnings is income generated from

services and / or. Products.Owner 's financing will have a direct effect on the company' s equity but may, or may not have an indirect effect on other. Portions of the owner 's equity. Reinvesting earnings into a company by establishing or increasing retained earnings will. Also have a direct effect on the company 's equity but may, or may not have an indirect effect on other portions of the owner s.' Equity, As such.They are independent equity accounts and inherently different.



Read more: http: / / www.ehow.com / info_8760095_differences-stock-equity-retained-earnings.html



Ordinary. Shares are issued to the owners of a company. They have a nominal or ',' value face typically of $1 or 50 cents. The market. Value of a quoted company 's shares bears no relationship to their, nominal valueExcept that when ordinary shares are issued, for cash the issue price must be equal to or be more than the nominal value. Of the shares.



are Deferred ordinary shares a form of ordinary shares which are, entitled to a dividend only after a certain. Date or if profits rise above a certain amount. Voting rights might also differ from those attached to other ordinary shares.

.Ordinary shareholders put funds into their company:

a) by paying for a new issue of shares
b) through retained profits.
Simply. Retaining profits instead of, paying them out in the form of dividends offers an, important simple low-cost, source, of finance. Although this method may not provide enough, example funds for, the if firm is seeking to grow.

.A new issue of shares might be made in a variety of different circumstances:

a) The company might want to raise more, cash. If it issues ordinary shares, for cash should the shares be issued pro rata to, existing shareholders so that control or. Ownership of the company is not affected? If for example, a company, with 200 000 Ordinary, shares in issue decides to, issue 50000 new shares to, raise cash should it offer the new shares to existing shareholders or should, it sell them to new shareholders. Instead?
I) If a company sells the new shares to existing shareholders in proportion to their existing shareholding in the. Company we have, a rights issue. In the example above the 50, 000 shares, would be issued as a one-in-four, rights issueBy offering shareholders one new share for every four shares they currently hold.
II) If the number of new shares being. Issued is small compared to the number of shares already in issue it might, be decided instead to sell them to, new shareholders. Since ownership of the company would only be minimally affected.

b) The company might want to issue shares partly to raise. Cash.But more importantly to float 'its shares on a stick exchange.

C) The company might issue new shares to the shareholders. Of another company in order, to take it over.

For any company the amount, of earnings retained within the business has. A direct impact on the amount of dividends. Profit re-invested as retained earnings is profit that could have been paid. As a dividend.The major reasons for using retained earnings to finance, new investments rather than to pay higher dividends and then. Raise new equity for the, new investments are as follows:

a) The management of many companies believes that retained earnings. Are funds which do not, cost anything although this is not, However true.It is true that the use of retained earnings as a source of funds does not lead to a payment of cash.
b) The dividend policy. Of the company is in practice determined by the directors. From their standpoint retained earnings, are an attractive source. Of finance because investment projects can be undertaken without involving either the shareholders or any outsiders.

.C) The use of retained earnings as opposed to new shares or debentures avoids issue costs.

D) The use of retained earnings. Avoids the possibility of a change in control resulting from an issue of new shares.

Another factor that may be of importance. Is the financial and taxation position of the company 's shareholders. If for example, because of Taxation considerations,,They would rather make a capital profit (which will only be taxed when shares are sold) than receive, current income then. Finance through retained earnings would be preferred to other methods.

A company must restrict its self-financing through. Retained profits because shareholders should be paid a, reasonable dividend in line with, realistic expectationsEven if the directors would rather keep the funds for re-investing. At the same time a company, that is looking for extra. Funds will not be expected by investors (such as banks) to pay generous dividends nor over-generous, salaries to owner-directors.