No dividends can be paid to the common stockholders until preferred stock dividends have been paid.

Name: No dividends can be paid to the common stockholders until preferred stock dividends have been paid.
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Question

Quizplus · Accepted Answer

This statement is a basic principle of corporate finance. Preferred stockholders have a higher priority claim on the company's earnings and must be paid their dividends before any dividends can be paid to common stockholders.

No Dividends Can Be Paid to the Common Stockholders Until