The profit a company generates that is available for distribution as dividends to the holders of ordinary shares.
Gearing refers to the relationship between funds provided to a company by ordinary shareholders and long-term funds with a fixed interest charge such as debentures and preference shares. High gearing implies higher fixed charges on debt, impacting investment risk and returns.
A type of equity ownership in a company that entitles holders to a fixed dividend before any dividends are paid to ordinary shareholders.
Residual Equity Theory emphasizes the rights and interests of ordinary shareholders, viewing them as the real owners of a business. It reflects in earnings per share, aiding shareholder investment decisions. This theory positions itself between the proprietary view and the entity view of a company.
