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Preferred Stock Value
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| Preferred Stock to Stockholder's Equity =
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Total Stockholder's Equity
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Explanation of Preferred Stock to Stockholder's Equity:
The Preferred Stock to Stockholder's Equity ratio shows the
percentage of the total value of preferred stock compared to the Total
Stockholder's Equity. This ratio uncovers situations where a company may
have too much emphasis on preferred stock, creating more risk to common
stockholders. Since preferred stock usually is given priority over common
stock, preferred stockholders are often given dividends and events causing
liquidation of the company may result in a return of some or all of the value
of their preferred stock.
Importance of Preferred Stock to Stockholder's Equity:
A low, or decreasing Preferred Stock to Stockholder's Equity ratio
is a good sign the company is maintaining a low amount of preferred stock, and
can indicate the common stockholders may be valued more by the company.
Notes to the accompanying financial statements will list details of preferred
stock.
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