How to explain for Preference Share Capital ?

Money that a company has from selling preference share, shareholders with these shares must be paid before those with ordinary share when a company is paying dividends or if it goes bankrupt. Preference share capital can be redeemed after a period of time.

Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Like common stock, preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Also unlike common stock, preference shares pay a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so. The main benefit to owning preference shares are that the investor has a greater claim on the company's assets than common stockholders. Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before common stockholders. In general, there are four different types of preferred stock: cumulative preferred stock, non-cumulative preferred stock, participating preferred stock, and convertible preferred stock.,also called preferred stock.

The shares having preference over dividend

Agreed with the answer

SREEDEVI SUNILKUMAR