Residual Claim to Income
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What is meant by the term "residual claim to income", as applied to common stockholders?
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This solution defines the term "residual claim to income" as it applies to common stockholders in 250 words with one reference.
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What is meant by the term "residual claim to income", as applied to common stockholders?
As applied to common shareholders, the shareholders "are entitled to the remaining income/profits of the company after all outside claims are met." The earnings/income available to shareholders equal profit after tax minus preference dividend; the preference after tax is equal to operating profits less taxes (Khan, 2007). It can be argued that the stockholders have a residual ...
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