Dividends in arrears are associated with the

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Dividends in arrears are associated with cumulative dividend preference. Cumulative dividend preference means that preferred shareholders have the right to receive any unpaid dividends from previous years before common shareholders can receive any dividends. If the company is unable to pay out dividends in a particular year, those dividends accumulate and become dividends in arrears. Only cumulative dividend preference ensures that dividends are accrued and paid out. Current dividend preference only guarantees payment of dividends in the current year, and noncumulative dividend preference does not accumulate any unpaid dividends.

Dividends in Arrears Are Associated with the