Capital stock is simply the ordinary shares of stock companies issue to raise money.

Large companies may divide their capital stock into various "classes." When that happens, each "class" of shares will gain certain rights that distinguish them from other classes.

The two most common classes of capital stock are common stock and preferred stock. But there may also be non-voting stock, employee stock, and ordinary stock.

If a stock certificate is specifically labeled capital stock, and it lacks common or preferred designations, then it is generally implied that there is only one class of stock. In those cases, capital stock is synonymous with ordinary common stock.

Carefully read common and preferred stock certificates and you will find that many contain the word "capital." In fact, the earlier types of the certificates were often labeled "common capital stock" or "preferred capital stock." This is indication that common and preferred shares are really classes of capital stock.

(Remember, though, that common shares and preferred shares have different rights. See more discussion in Stock Certificate Terminology.)