Stockholders' Equity

Advantages- Less liability for stakeholders. Ability to raise funds/capital in the form of stocks as needed.

Preferred dividends are generally fixed they can be valued as a constant growth rate of zero. You use the zero growth models for the preferred stock and the assumption that the dividends always stay the same and you use the constant growth model for common stock because the dividend grows by a specific percent a year.

When a company goes public it is not always positive. One disadvantage of going public is the owner or owners of a company cannot manage the company like it is his or her private company anymore. The business must make sure and acknowledge that they are responsible to shareholders and will need to make sure that they have quarterly calls and explain their business actions and why they made the choices they did. A company making this transition and going through this process can longer just do what they want and get away with it. They have to take the responsibility and remember to respect shareholders in order to have a successful company and continue to grow. Another disadvantage carrying from the last issue is that all

To put it simply, in financial terms, to maximize shareholders wealth means to maximize purchasing power. Throughout the years, we have learned that markets are most efficient when the company is able to maximize at the current share price. Every company’s main goal should be to strive to maximize its value to every single one of their shareholders. Common stock represents the value of the market price, and it also gives the shareholder an idea of the different investment, financing, and dividend decisions made by that particular firm.

Being a stockholder can have great rewards like a viable source of income, or an eggs nest for retirement, however it does have its downsides as well. Owning stock in a corporation bears the risk of losing all one’s investment if the company goes bankrupt. Aside from financial benefits, owning stock allows stockholders to have a voice (however small it may be) in the company’s direction.

does not increase for preferred stock because with this type of stock, dividends are a fixed

Dividends are payments made by a company to its shareholders during a specified time intervals, say, quarterly or yearly. It is the portion of corporate profits paid out to stockholders. When a company earns money out of the business, that money can be put to two uses: it can either be re-invested in the business or it can be paid to the shareholders. This payment is called dividend.

If a person owns stock, or shares of stock, then they possess an ownership interest in a corporation. The owners will receive dividends when the corporation reflects a profit. All corporations issue common stock, however some issue preferred stock along with its common stock. Stocks can be bought and sold.

Common stock makes up the majority of stock issued. Common stock owners have ownership in the company and claim dividends. They also get one vote per share to elect board members. Common stock yields

Being a publicly traded company is not for the faint of heart; it costs a lot of money and requires to go under many regulations so companies should be considered why they want to become one. There are many advantages of being a publically traded company. For example, by being a publically traded company there is many other ways to raise capital such as issuing bonds or commercial paper, versus being a private which one only can issue equity. The factors that impact the cost of an IPO includes:

It has the option to distribute the cash in the form of dividends. Shareholders were taxed on cash dividends at ordinary income rates whereas gains realized on shares that were repurchased received capital gains treatment.

Dividend policy refers to the payout policy that a company follows in determining the size and pattern of distributions to shareholders over time. Distribution of cash to shareholders by either payment of dividends and repurchase of shares has been a hotly debated topic amongst scholars. There exists many answers to an optimal dividend policy that satisfies both shareholders and management. With this the company generally faces two operational choices, the investment decision and the financing decision. Investment decisions concern the amount invested in the assets of the business and composition whereas the finance decision involves how the company will finance this. This can be achieved

The main advantage of this is that large amount of capital can be raised very quickly. One disadvantage is that the original shareholders can lose domination of a business if large quantities of shares are purchased as part of a takeover. It is also costly to have shares quoted on the stock exchange. Another disadvantage would be the financial disclosure where Yum! Brands Inc. has to publish a report of their financial information for the public to read also involving their competitors.

There have choices of taking the dividend payment or reinvesting to the investors when they buy a dividend stock. If they reinvest the dividends into the stock, they add more value in investment for compound interest when they buy more shares.

A dividend is a usually distributed in cash form to stock holders of a corporation approved by the board of director. It may also include stock dividend or other forms of payment. A stock dividend represents a distribution of additional shares to common stockholders. Dividends are only cash payments regularly made by corporations to their stockholders.