Calvin Finance Stakeholder


A stakeholder is a party that is more often interested in a company, and it may be affected or affect by the business. Stakeholders are usually composed of customers, suppliers, investors, and employees. Whereby an entity stakeholder is either an internal or external and at times be both to the organization. Stakeholders consist of four main components: additional paid-in capital, retained earnings, treasury stock, and outstanding shares. Hence, if the stakeholder’s equity is optimistic, it will enable the company to have enough assets to pay for its liabilities. If it’s negative, it will surpass the liabilities of assets. Equity is a financial metric that allows investors to evaluate the company’s worthiness and long-term sustainability. There are three main components in the stockholder’s equity: retained earnings, net income, dividends, and share capital.

Retained earnings: They are not distributed as dividends to stockholders, but they are used back for investments in the business. They are also used as capital for funding debt servicing and fixing asset purchases.

Dividend payments: this is the amount of money paid by companies to stockholders, and it is entirely discretionary, whereby a company does not have any obligations on paying dividends unless the board declares it.

Share capital: the amount of money received by the company that is reporting from transactions with the shareholders. Whereby companies can issue ordinary shares or preferred shares. Common shares do not represent residual ownerships in the company and any liquidation on the event. Hence, preferred shareholders get to be paid first before common shares are paid.


Work Cited

Yhip, Terence M., and Bijan MD Alagheband. “Financial Statement Analysis.” The Practice of Lending. Palgrave Macmillan, Cham, 2020. 47-94.

Maia, Marcelo Verdini. “What does explain the relation between financial leverage and the equity returns.” Business Management Dynamics 8.5 (2018): 6.


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