What is the difference between common stock and preferred stock? Financial statement M. Awais Sandhu University of agriculture Fsd MBA 3.5y 03007271202

1. In The Name of Allah The Most Beneficent The Most Merciful.

2. Farooq Ahmad
Institute of Business Management & Sciences
University of Agriculture Faisalabad.

3. M. Awais Tariq
Registration # 2013-ag-1062
MBA Section D
Institute of Business Management & Sciences
University of Agriculture, Faisalabad.

4. Common Stock & Preferred Stock
Financial Statement

5. “Common stock possesses the traditional right
of ownership voting right, participation in
dividends, and a residual claim to assets in
the event of liquidation.”

6. “Preferred stock generally has a dividend that
must be paid out before dividends to
common stockholders and the shares usually
do not have voting rights is called preferred
stock”.

7.  Function
 Voting right
 Redemption
 Kind
 Face value
 Convertibility
 Cumulative dividend rights
 Dividend

8.  Preferred stock is designed to function
primarily as a fixed-income security.
 Whereas common stock is usually considered
to be a vehicle for long-term growth that
often does not deliver a regular income
stream.

9.  Common stock holders have a right of voting
on corporate policy.
 Due to their preferential treatment they do
not have the voting rights that come with
common stock.

10.  Common stockholder usually receive their
dividend after preferred shareholder.
 Preferred shareholders also usually receive
their dividends before anything is paid to
common shareholders.

11.  Common stock do not have cumulated
dividend rights
 The dividend preference carried by most
preferred stocks is a cumulative one.

12.  Common stock is not convertible into
debentures.
 The preferred stock may be convertible into
share

13.  The face value of common stock shares is
usually low than preferred share.
 The face value of preferred share is usually
higher.

14.  The share has one type equity shares now.
 The preferred share have two are three
types.

15.  The common share not redeemable during
the lifetime.
 The preferred share is redeemable
stockholder demand.

16. The principal means of reporting general
purpose financial information to person
outside a business organization is a set of
accounting reports called financial
statement. The person receiving these
reports is termed the user of the financial
statement.

17. A set of financial statement consist of four
related accounting reports that summarize in
a few pages the financial recourse,
obligations, profitability and cash
transactions of a business
1. Balance Sheet
2. Income Statement
3. Statement of Owner’s Equity
4. Cash Flow Statement

18.  A balance sheet showing at a specific date
the financial position of the company by
indicating the resource that it owns, the
debt that it owes and the amount of the
owner’s equity or investment in the business.

19.  An income statement indicating the
profitability of the business over the
preceding year or the time period.

20.  It’s explaining certain change in the amount
of the owner’s equity in the business. In
business which is organized as corporation
the statement of owner’s equity is replaced
by the statement of retained earnings.

21.  A statement of cash flow summarizing the
cash receipts and cash payment of business
over the same time period covered by the
income statement.

22.  I am inviting you to ask any question about
my topic?