What is meant by 'capital stock' in corporate terms?

In corporate terms, 'capital stock' refers to the total amount of money or assets that shareholders contribute to the corporation in exchange for shares of stock. This concept is fundamental to a corporation's financial structure, as capital stock represents the equity that shareholders have in the company. When individuals or entities purchase shares, they provide the necessary funds that the corporation can use for operations, investments, and growth. Capital stock can encompass various forms, including common and preferred stocks.

Understanding the nuances of capital stock helps in grasping concepts like ownership, voting rights, and how dividends may be distributed. It essentially reflects the business's ability to raise capital through the issuance of shares, which is crucial for its viability and expansion.