Ordinary shares represent a claim on residual income.

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Ordinary shares, also known as common shares, represent ownership in a company and give shareholders a claim on residual income, which is the income left over after all expenses and debts are paid. This residual income is distributed to shareholders through dividends or retained earnings. However, ordinary shareholders have lower priority than other stakeholders in the event of liquidation or bankruptcy.

Ordinary Shares Represent a Claim on Residual Income