5 Obligations for a General Public Company

In general, public companies have various items they need to pay before they can claim a profit.  If you are an investor, do you know the various items and where you are on the list as far as when you will get paid?

If you were a creditor for a real estate property, wouldn't you want to know whether you were the first to get paid or the last on the list to get paid?

Here are the obligations for a general public company, ranking from the order in which they get paid:

1. IRS Taxes
2. Debentures or Unsecured Debt
3. Bonds or Secured Debt
4. Preferred Stock
5. Common Stock

Most people purchase common stock and don't realize that the company must pay off all debt before they can pay a dividend on common stock.  Even the preferred stock holders must wait until the debt gets paid.  In some cases, the company will claim bankruptcy and all proceeds will go to paying off debt, leaving the shareholders with nothing.

Read more at useconomy.about.com.

This post was reposted from http://finlit.biz/retirement-2/5-obligations-for-a-general-public-company/, originally written on February 5th, 2013.