| book value | The firm's total assets minus the total liabilities (i.e., net worth).
|
 |
|
|
| capital surplus | Amounts of directly contributed equity capital in excess of the par value.
|
|
|
|
| common stock | Equity claims held by the "residual owners" of the firm, who are the last to receive any distribution of earnings or assets.
|
|
|
|
| cumulative voting | A procedure whereby a shareholder may cast all of his or her votes for one member of the board of directors.
|
|
|
|
| dividends | Payment made by a firm to its owners, either in cash or in stock. Also called the income component of the return on an investment in stock.
|
|
|
|
| internal financing | Net income plus depreciation minus dividends. Internal financing comes from internally generated cash flow.
|
|
|
|
| pecking order | Hierarchy of longterm financing strategies, in which using internally generated cash is at the top and issuing new equity is at the bottom.
|
|
|
|
| preferred stock | A type of stock whose holders are given certain priority over common stockholders in the payment of dividends. Usually the dividend rate is fixed at the time of issue. Preferred stockholders normally do not receive voting rights.
|
|
|
|
| proxy | A grant of authority by the shareholder to transfer his or her voting rights to someone else.
|
|
|
|
| retained earnings | Earnings not paid out as dividends.
|
|
|
|
| seniority | The order of repayment. In the event of bankruptcy, senior debt must be repaid before subordinated debt receives any payment.
|
|
|
|
| straight voting | A shareholder may cast all of his or her votes for each candidate for the board of directors.
|
|
|
|
| subordinate debt | Debt whose holders have a claim on the firm's assets only after senior debtholders' claims have been satisfied.
|