Corp. Finance #14 Financing-Commons Stock & Preferred Stock

Understanding Corporate Financing: Common Stock & Preferred Stock

This course dives into the world of corporate financing, specifically focusing on equity financing options. We'll explore how companies raise capital through different types of ownership, with a detailed look at common stock and preferred stock.

We'll break down financing options into two main categories: debt and equity. This course concentrates on the equity side, explaining the nuances of each type.

Common Stock: This represents basic company ownership. You'll learn about its role in raising capital and the implications for shareholders.

Preferred Stock: A hybrid security, preferred stock combines features of both debt and equity. While preferred stockholders typically don't have the same voting rights as common stockholders, they often receive priority in dividend distributions and asset distribution in the event of liquidation.

Key Concepts Covered:

• Common Stock vs. Preferred Stock: A clear comparison of the two primary equity financing instruments.
• Voting Rights: Understanding the difference in voting rights between common and preferred stockholders.
• Dividend Priority: How preferred stock holders receive priority on dividend payments.
• Liquidation Preference: The priority of preferred stock holders in asset distribution during company liquidation.
• Majority Voting: Learn the rules surrounding majority voting in corporate governance.
• Cumulative Voting: A deep dive into cumulative voting, including calculations for electing board members. We'll cover how to determine the number of shares needed to elect a certain number of board members, and vice versa.

Learning Experience:

This course is designed for practical application. You'll benefit from:

• Numerous example problems presented in both presentation and Excel worksheet formats.
• Downloadable Excel workbooks with at least two tabs: one containing answers and another with a preformatted worksheet for step-by-step completion.
• Instructional videos to guide you through each concept.

Beyond Corporate Finance: The principles of majority voting and cumulative voting are relevant in various contexts, including politics and non-profit organizations.