Airtract

Hina Sohail

Heads up in the clouds

Common stock refers to the share of ownership of a firm. Preferred stock also involves the property of a share, but it is entirely different when compared to common stock. The common stockholder has the right to vote in company matters when some issue arises whereas the preferred stock does not give an individual voting right.

When a company starts making profits, they pay the dividends first to the preferred stockholders and then to the common stockholders. The common stockholders are also known as equity shareholders. Such individuals have the right to sell their stocks to other buyers and make profits. This is a considerable benefit available to the common stockholders over the preferred stockholders. It enables them to make huge profits and become prosperous. If an organization resolves to liquidate, the common stockholders are paid their shares in the company but only after paying off the liabilities and the preferred stockholders.

The dividends for the preferred stockholders remain stable even if the profits of the corporation increase. For the equity shareholders, there is an increase in the dividend as the financial gain increases. If a company has a loss, the preferred stock receives the fixed dividends, but the common stockholders receive dividends only if there is some amount left. So, it may happen that the common stockholders do not receive any money. If a firm does not pay the dividends to the preferred stockholders due to some reason, they are liable to pay the debts the next year.

The equity shareholders can’t enjoy this unique benefit. The growth potential of the equity shareholders is much higher than the preferred stockholders whose profits do not increase along with the surplus gain of the organization. Common stockholders are not given any priorities as they are considered as a member of the corporation whereas the preferred stockholders are given preferences over the equity shareholders.

The common stocks are preferred by a person who wants to become wealthy soon and who wants to double the money. However, it has its risks. For a person who is not willing to take risks and would like to have a fixed sum annually so to have a secure life prefers a preferred stock. Both the stock comes with its benefits and risks.


Business and Entrepreneurship Courses

Airtract FLASH SALE

Do Your Own Accounts

Lisa Newton

0 (0) New Course

How to do your own manual bookkeeping using excel spreadsheets.

1 hrs 30.27 mins 0 Students Enrolled 11 Lectures

$19

51.28 % off $39

$19

Buy Now
Airtract FLASH SALE

Start Your Own Business

Lisa Newton

0 (0) New Course

There are some downloadable items for you to fill in for your own reference - a business plan and a marketing plan. The course will take about 7 hours to complete. If you are thinking of starting y...

2 hrs 4.32 mins 0 Students Enrolled 16 Lectures

$19

57.78 % off $45

$19

Buy Now
Airtract FLASH SALE

How to be a Great Executive Researcher & Recruiter...

Gary Wilson

0 (0) New Course

This course is designed to train the student in the role of an executive search consultant. It is designed to be a basis upon which any bright individual with the right (Do It Now) attitude can be...

3 hrs 49.10 mins 0 Students Enrolled 16 Lectures

$19

90.0 % off $190

$19

Buy Now

Build Strong Foundation to Become an Entrepreneur ...

Mayur Pangrekar Verified

0 (0) New Course

Welcome! Learn directly from International life coach and trainer Mayur Pangrekar. Mayur Pangrekar has taught more than 3000 people in training programs and more than 5000 people through video c...

1 hrs 26.11 mins 2 Students Enrolled 15 Lectures

$ 0.00

Free Enroll Now
View All
Item added successfully. Go to cart for checkout.
Accept Reject