Preferred Dividends Paid Are Added Back to Net Income in Calculating

question 159

True/False

Preferred dividends paid are added back to net income in calculating earnings per share for common stockholders.

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Definitions:

Surplus

The situation where the quantity supplied of a product exceeds the quantity demanded at a given price.

Negative Externality

An economic situation where a third party is negatively affected by the actions of others, typically not reflected in the cost of those actions, such as pollution.

Common-Resource Problem

A dilemma in the management of resources that are available to all but are susceptible to overuse and depletion because they are not excludable.

Nontoll Roads

Public roads that can be used without paying a fee, financed by taxes rather than direct user charges.