Briefly Describe the Traditionalists' Position on Capital Structure

question 45

Essay

Briefly describe the traditionalists' position on capital structure.

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Definitions:

Cumulative Preferred Shares

Type of preferred stocks where dividends accumulate if not paid in a given year, and must be paid out before common stock dividends can resume.

Surplus (Deficit)

The financial position that results when total revenues exceed (surplus) or are less than (deficit) total expenses.

Consolidated Balance Sheet

A financial statement that presents the assets, liabilities, and shareholders' equity of a parent company and its subsidiaries as one entity.

Cash

Money in the form of coins or banknotes, especially that held by an organization as its liquid assets.