Hello Pick One Of These Questions And Write A 350-500 Word P

Hello Pickoneof These Questions And Write A 350 500 Word Paper On Thi

Hello, pick ONE of these questions and write a word paper on this. 1. Calculate the ending inventory under each of the following methods given the information below about purchases and sales during the year. Assume a periodic inventory system. April 1 Beginning inventory 20 units @ $30 11 Purchases 70 units @ $32 21 Purchases 50 units @ $35 Sales for April: 115 units a. ________ FIFO b. ________ LIFO c. ________ Weighted-average 2.

Rockwell Industries purchased a plant asset to be used in its business. The expenditures included: Cost of machine $8,000 Special concrete base to support machine $500 Freight charges $1,000 Repair cost of damage incurred during installation $300 The Machine account will be debited for ________. 3. List and discuss the following: a. Rights of common stockholders b. Rights of preferred stockholders

Paper For Above instruction

Choosing among the provided questions, I will explore the third question regarding the rights of common and preferred stockholders. This topic delves into fundamental aspects of corporate finance and governance, providing insight into shareholder privileges and their implications for company management and investor rights.

In corporate structure, stockholders are paramount as they possess ownership interests in a corporation. The rights of these shareholders vary depending on whether they hold common or preferred stock, each serving distinct roles within the company's equity structure. Understanding these rights is essential for investors, corporate managers, and stakeholders to navigate corporate decision-making processes and safeguard their investments.

Rights of Common Stockholders

Common stockholders are the residual owners of a corporation, meaning they own a portion of the company and are entitled to vote on significant corporate matters. This voting right typically includes electing the board of directors, approving significant corporate policies, and other fundamental decisions such as mergers or acquisitions. The right to vote is usually exercised during annual or special shareholder meetings, granting common shareholders a voice in corporate governance (Brigham & Houston, 2019).

Moreover, common shareholders have the right to receive dividends declared by the company, although these are not guaranteed and depend on the company's profitability and discretion of the board of directors. They also have the right to dividends if dividends are paid. Additionally, common shareholders possess the right to residual assets during liquidation, receiving a proportionate share after all liabilities and preferred stockholders' claims are satisfied (Ross, Westerfield, & Jaffe, 2021).

Rights of Preferred Stockholders

Preferred stockholders primarily enjoy certain prioritized rights over common stockholders. Their key privilege is receiving dividends before common shareholders, often at a fixed rate. This dividend preference provides a more stable income stream, appealing to income-focused investors (Mishkin & Eakins, 2018). If the company faces financial difficulties, preferred stockholders are paid dividends first, which reduces their investment risk compared to common shareholders.

Another significant right of preferred stockholders is a higher claim on assets during liquidation. While they do not typically have voting rights, their higher priority in asset claims can mitigate some investment risks associated with the company's financial instability. Some preferred stocks are cumulative, meaning if dividends are missed, they accumulate and must be paid before dividends can be distributed to common shareholders. Others are non-cumulative, where missed dividends are forfeited (Brealey, Myers, & Allen, 2019).

Comparison and Implications

The distinction between common and preferred stockholder rights reflects their risk and reward profiles. Common stockholders enjoy voting rights and potential for capital appreciation but bear more risk in dividend payments and liquidation. Conversely, preferred stockholders receive priority in dividends and liquidation but typically lack voting rights. This structure allows companies to raise capital efficiently while catering to diverse investor preferences.

In conclusion, understanding the rights of common and preferred stockholders is fundamental for comprehending corporate governance and investment strategies. Each class of stock offers different benefits and risks, influencing investor decisions and company policies. Investors should carefully consider these rights in alignment with their financial goals and risk tolerance.

References

• Brealey, R. A., Myers, S. C., & Allen, F. (2019). Principles of Corporate Finance (12th ed.). McGraw-Hill Education.
• Brigham, E. F., & Houston, J. F. (2019). Fundamentals of Financial Management (14th ed.). Cengage Learning.
• Mishkin, F. S., & Eakins, S. G. (2018). Financial Markets and Institutions (9th ed.). Pearson.
• Ross, S. A., Westerfield, R. W., & Jaffe, J. (2021). Corporate Finance (12th ed.). McGraw-Hill Education.