Q.Define an Equity Share.

Equity shares are the most basic ownership unit of a company, studied in every AP Board Class 11 Commerce answer on company finance.

Equity shareholders get dividend only after preference shareholders and creditors have been paid.

An equity share, also called an ordinary share, represents a unit of ownership in a company. A person holding equity shares becomes a part-owner of the company and is entitled to vote at general meetings on matters such as the election of directors.

Equity shareholders do not receive a fixed rate of dividend; the amount, if any, depends on the profit earned by the company in a given year and the decision of its board of directors, and equity dividend is paid only after the claims of preference shareholders and outside creditors have been met. Because their return is uncertain, equity shareholders bear the highest risk among a company's capital providers, but they also have no upper limit on the dividend they may eventually receive if the company performs very well.