Preferred Stock to Stockholders Equity Definition

Our Financial Analysis Success Kit is Ready!

Click the button to learn more about the Financial Analysis Success Kit

Why you should take a look at the Financial Analysis Success Kit:

We've combined all our highly popular financial analysis tools into one mega-financial-analysis-kit that will save you hundreds of dollars if purchased separately. The kit contains 9 files packed with the most important financial ratio analysis tools you can find to help rocket your way to mastering financial analysis. The kit includes:

1. The eBook "Learn Ratio Analysis In Minutes"

2. The Learn Financial Ratio Analysis Excel Spreadsheet (2 versions!)

3. A BONUS...Our eBook of "Key Financial Statement Terms"

4. Another HUGE BONUS...Five-Part Financial Ratio Cheat Sheet Series

The result? You get all these professionally created tools for a great low price.

Learn more on our product page:

Take a Look

Quick Definition

Measures the percentage of preferred stock to all stock issued by a company, exposing the level of risk to common stockholders.

Explanation of Preferred Stock to Stockholders Equity

The Preferred Stock to Stockholder’s Equity ratio shows the percentage of the total Preferred Stock Value compared to the Total Stockholders Equity. This ratio uncovers situations where a company may have too much emphasis on preferred stock, creating more risk to common stockholders.

Since preferred stock usually is given priority over common stock, preferred stockholders are often given dividends and events causing liquidation of the company may result in a return of some or all of the value of their preferred stock.

Importance of Preferred Stock to Stockholders Equity

A low, or decreasing Preferred Stock to Stockholder’s Equity ratio is a good sign the company is maintaining a low amount of preferred stock, and can indicate the common stockholders may be valued more by the company. Notes to the accompanying financial statements will list details of preferred stock.