Imagine that you want to start his own pizzeria. Now starting the pizzeria will require some investment.

For example, the investment would in equipment, land, furniture, food supplies, etc. All the money spent to start your business pizzeria named as the capital. Say, that is required investment of $ 2000 to start his business pizzeria.

But what if you do not have the investment of $ 2000 to start his store pizza? In that situation, you have 2 options.

You have to take a loan from someone who needs to be repaid with interest. Or,

Issue shares (or share ownership of the company) to people who may be willing to invest in your pizza in exchange for a share of the benefits they bring your pizza.

Well, we have both a state-by-one and discover the pros and cons with them.

Disadvantages

It is very easy to borrow. In our example, if we borrow from anyone, then the first thing to be doing is to convince people that their money is safe and be able to return the money back. The person who is giving us loans would certainly be interested in knowing the company's future plans and things much more.

Then we will have to repay all the money we have taken as a loan with interest. This interest could increase as time passes. The longer it takes to repay the principal amount plus interest that would pay.

Advantages

You do not have to share ownership of the company.

Emission Inventories

Advantages

A company can raise more money than they can borrow.

You do not have to make periodic payments of interest with their creditors.

And you have to make principal payments.

Disadvantages

You have to share your property with others shareholders

Your shareholders have a say in company policies that affect the operation of the company.

So we can say that ...

Companies sell stock (property units) to raise money to finance expansion and growth of the company. The company founders give up part of his property in exchange for the cash needed.

The total number of shares which may vary from one company to another, because everyone makes their own choice about how many pieces of property to divide society.

A corporation may have only 2,500 shares, while another may issue more than one billion shares, such as IBM and Ford Motor Company.

The first sale of shares to the public is called the initial public offering (IPO) and occurs in the primary market.

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