not have publicly traded stock. They may raise funds to finance their operations or new investments by raising

capital through selling stock or issuing bonds.

Those who buy the stock become the firm's owners, or shareholders. Stock represents firm ownership; that is,

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17.1 • How Businesses Raise Financial Capital 411

a person who owns 100% of a company’s stock, by definition, owns the entire company. The company's stock

is divided into shares. Corporate giants like IBM, AT&T, Ford, General Electric, Microsoft, Merck, and Exxon all

have millions of stock shares. In most large and well-known firms, no individual owns a majority of the stock

shares. Instead, large numbers of shareholders—even those who hold thousands of shares—each have only a

small slice of the firm's overall ownership.

When a large number of shareholders own a company, there are three questions to ask:

1. How and when does the company obtain money from its sale of stock?
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