The residual income of the firm belongs to

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The residual income of the firm belongs to common stockholders, who are the owners of the company and have an equity claim on its assets and earnings. Creditors and bondholders have a debt claim and are entitled to receive fixed interest payments or principal repayments. Preferred stockholders may receive a fixed dividend payment, but their claim is subordinate to that of bondholders and creditors, and they do not have voting rights like common stockholders. Thus, only common stockholders are entitled to the residual income of the firm after all other claims have been satisfied.

The Residual Income of the Firm Belongs to