The residual income of the firm belongs to

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The residual income of a firm belongs to common shareholders because once all expenses, debt obligations, and preferred dividends have been paid, any excess earnings are available for distribution to common shareholders in the form of dividends or retained earnings. Creditors, such as lenders, are entitled to receive interest payments and repayment of principal, and preferred shareholders have a fixed dividend rate that must be paid before any dividends are paid to common shareholders. The Canada Revenue Agency is a government agency responsible for collecting taxes and would not have any claim to a firm's residual income.

The Residual Income of the Firm Belongs to