Final answer:
The two sources of equity financing that increase stockholders' equity are issuing stock and reinvesting profits. Issuing stock brings in new capital while reinvesting profits uses company earnings to foster growth, both expanding equity without increasing debt.
Step-by-step explanation:
Two sources of equity financing which increase stockholders' equity are issuing stock and reinvesting profits. By issuing stock, firms can increase their financial capital for expansion without the obligation of repayment, which becomes part of the stockholders' equity.
On the other hand, when a company is profitable, it can opt to reinvest some of those profits back into the business, which also increases stockholders' equity. This reinvestment can be directed towards new equipment, structures, and research and development. However, issuing stock entails significant costs and legal compliance with entities like the Securities and Exchange Commission (SEC).