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Stockholders Equity

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Running Head: STOCKHOLDER’S EQUITY

Stockholder’s equity

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STOCKHOLDER’S EQUITY

Introduction

The section of liabilities in the company’s balance sheet includes the equity of the

stockholder. This section is meant to show the total capital that the organization has made

sourcing from the stockholders by the issuance of securities like the common and preferred

stocks. Retained earnings are also shown which are basically part of the wealth of a stockholder,

it helps the company for expansion in the future. The management buys back some of the shares

from stockholders for them to keep their controlling interest. For the complete understanding of

stockholder’s equity it is of importance that we make discussions on these elements.

Preferred Stock

Preferred stock refers to the stocks of the company which have a high claim on the

earnings and the assets of the company compared to the common stock. This stock carries a fixed

dividend rate and have preferred payment before any dividend is paid to the common stocks. The

dividend rate in general is higher than the common stock and the payments are done in regular

intervals. In case of getting rid of the preferred stockholders of the company, they have full rights

to receive payments before the common do. From the perspective of an investor, this preferred

stock can be a very safe investment. We can also say that common stocks and bonds can make

characteristics of the preferred stock.

Lachlin Corporation has 10,000 authorized preferred stock shares and out of them the

company has issued 6,000. Authorized shares are the specific number of the company’s shares

that they are willing to issue in its lifetime while the issued shares the company has sold to public

and received the amount of money relative to them. Preferred stock’s total value is $600,000. It

means that the company has issued preferred stock at a par value of $100 ($600,000 / 6,000)

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Running Head: STOCKHOLDER’S EQUITY Stockholder’s equity Student’s name: Professor’s name: Date: 1 STOCKHOLDER’S EQUITY Introduction The section of liabilities in the company’s balance sheet includes the equity of the stockholder. This section is meant to show the total capital that the organization has made sourcing from the stockholders by the issuance of securities like the common and preferred stocks. Retained earnings are also shown which are basically part of the wealth of a stockholder, it helps the company for expansion in the future. The management buys back some of the shares from stockholders for them to keep their controlling interest. For the complete understanding of stockholder’s equity it is of importance that we make discussions on these elements. Preferred Stock Preferred stock refers to the stocks of the company which have a high claim on the earnings and the assets of the company compared to the common stock. This stock carries a fixed dividend rate and have preferred payment before any dividend is paid to the common stocks. The dividend rate in general is higher than the common stock and the payments are done in regular intervals. In case of getting rid of the preferred stockholders of the company, they have full rights to receive payments before the common do. From the perspective of an investor, this preferred stock can be a very safe investment. We can also say that common stocks and bonds can make characteristics of the preferred sto ...
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