Share capital/owner’s capital investment:
The capital raised by issuing shares to the public is called share capital.
Equity share:
- Share capital is one of the leading sources of raising capital for the business. The company first estimates the share capital fund it needs to set up and run the business.
- If then divides the amount of capital in small parts which are called shares. It sells these shares to public and raise the funds.
- The shares can be mainly of two types namely (i) Equity shares and (ii) Preference shares.
Example:
Suppose a company needs ₹ 1,00,00,000 (₹ 1 crore) as capital from shares. The company divides this amount into 10 lakh shares of ₹ 10 each. This means that the price of one share (part) of this company is ₹ 10 and the share capital is divided into 1 lakh shares.
