Purchase Solution

when to issue Preferred Stock

Not what you're looking for?

Ask Custom Question

Does a company always have to be in trouble before considering to issue Preferred Stock?

Please provide examples.

Purchase this Solution
Solution Summary

The expert determines if a company always has to be in trouble before considering to issue preferred stocks.

Solution Preview

A company does not necessarily have to be in trouble before considering to issue Preferred Stock. It just might choose to do so because of the flexibility that the stock provides regarding the payment of dividends to stock holders. With typical common shares, dividends are paid on a regular basis, regardless of how well the company is performing. The benefit that Preferred Stock provides is that it gives the company the option of suspending the delivery of those dividends in times when the company does not have a good supply of cash flow.

More information on Preferred Stock:

Companies issue preferred stock to strengthen their balance sheet. As proceeds from preferred ...

Purchase this Solution
Free BrainMass Quizzes
Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Operations Management

This quiz tests a student's knowledge about Operations Management

View More Free Quizzes
Related BrainMass Solutions

  • Preferred Stock Value

    The solution explains how to calculate the price of a preferred stock.

  • The answer to preferred stock

    The solution explains how to calculate the price of a preferred stock.

  • This post addresses types of stock and types of dividends.

    A stock split is when a corporation issues new shares of stock to stockholders in direct proportion to the stock ownership they already have in the company.

  • Preferred Stock

    The solution explains how to calculate the value of preferred stock.

  • Preferred Stock Valuation

    The solution explains how to value preferred stock for North Pole Cruise Lines

  • weighted average cost of capital

    90142 What are the firm's after tax cost of debt, cost of preferred stock, cost of a new issue of common stock, cost of retained earnings, and the weighted average cost of capital (up to the point when retained earnings are exhausted and after all retained

  • Paymeny-in-kind preferred stock

    When companies go for leveraged buyouts, they are out of cash and they would like to issue payment in kind preferred stock.

  • Common and preferred stock

    As a corporation, would you rather issue preferred or common stock? Why? Preferred and common stocks are different in two key aspects. First, preferred stockholders have a greater claim to a company's assets and earnings.

  • Discussing Various Aspects of Accounting

    Should an organization issue common stock, preferred stock, or bonds to raise capital? Why? As an investor, how would you prefer to see a company raise capital? Why? As a corporation, would you rather issue preferred or common stock? Why? 3.

View More Related Solutions