ADM 1340 Lecture Notes - Lecture 11: Investment, Income Tax, Retained Earnings

• School: University of Ottawa
• Department: Administration
• Course: ADM 1340
• Professor: Heri Rakotovololona

Document Summary

Corporation: a legal entity that is separate and distinct from its owners, who are known as shareholders. 1- public corporation: may have thousands of shareholders. 2- private corporation: usually has only a few shareholders. Each common share gives the shareholder the owner the right to vote, the right to dividends, and the right to any assets that remain after liquidation (fair share). Essentially common shares are the shares whe(cid:396)e the sha(cid:396)eholde(cid:396) (cid:272)o(cid:374)t(cid:396)i(cid:271)utes (cid:373)o(cid:374)e(cid:455) fo(cid:396) a (cid:858)(cid:448)oi(cid:272)e(cid:859) i(cid:374) the (cid:272)o(cid:373)pa(cid:374)(cid:455)(cid:859)s a(cid:272)ti(cid:448)ities. Essentially preferred shares are shares that are paid before common shares are paid, but preferred sha(cid:396)e o(cid:449)(cid:374)e(cid:396)s do (cid:374)ot ha(cid:448)e a (cid:858)(cid:448)oi(cid:272)e(cid:859) i(cid:374) the (cid:272)o(cid:373)pa(cid:374)(cid:455), the(cid:455) (cid:373)erely receive the profits. 1- redeemable: the organization can request to buy the share back at any time. 2- retractable: the shareholder can request the monetary value of the share in return for the share. Retained earnings are the cumulative profits since incorporation that have been retained in the company.