Common stockholders have a residual claim to income, in other words they are last in line.

Question

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Common stockholders have a lower priority for receiving income compared to other stakeholders such as creditors, preferred shareholders, and bondholders. In case a company faces bankruptcy or liquidation, common stockholders will be the last ones to receive any remaining assets or income after all other claims are satisfied.

Common Stockholders Have a Residual Claim to Income, in Other