A common stockholder has no guarantee of receiving any cash inflows, but receives what is left after all other claims on the firm's income and assets have been satisfied.

Question

Quizplus · Accepted Answer

This is true. Common stockholders are the most junior claimants on a company's income and assets, and have no guaranteed cash inflows. They only receive dividends and payouts after all other obligations, such as debt and preferred stock, have been fulfilled.

A Common Stockholder Has No Guarantee of Receiving Any Cash