Business owners and potential purchasers of businesses tend to have a number of questions about corporate stock and how it works. This post is a basic 101 tutorial, which answers some common questions about stock in a corporation and how it works.
What is stock?
A corporation’s capital stock represents ownership of the company and usually governance rights, although a corporation can issue stock that is non-voting.
A share of stock represents a percentage of ownership of the corporation. How much? It depends on how much stock is outstanding. To determine the percent ownership a shareholder has, divide the total number of shares the shareholder owns by the number of issued and outstanding shares. If, for example, a shareholder has five shares and there are 100 shares of issued and outstanding shares, the shareholder owns five percent of the company. Continue Reading