Question

“Shareholders of corporate stock may have claims to a company’s assets and income.”  Discuss and analyse this quote

Answer 1

Shareholders claim in company assets : in case of winding up of the company shareholders have their claim on realisation from the company assets but from the realisation of company assets first secured debt holders are paid then non secured debt holders trade liabilities after that balance amount is distributed to shareholders

Claim in earnings : share holders have their claim in earnings by way of dividends but in earnings also interest on debetures is paid then dividend to preferred shares are paid later dividend is paid after considering reinventment