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Meaning / Definition of

Preference Shares

Categories: Stocks, Fundamental Analysis, Accounting,

capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Like common stock, preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Also unlike common stock, preference shares pay a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so. The main benefit to owning preference shares are that the investor has a greater claim on the company's assets than common stockholders. Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before common stockholders. In general, there are four different types of preferred stock: cumulative preferred stock, non-cumulative preferred stock, participating preferred stock, and convertible preferred stock. also called preferred stock.

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Definition / Meaning of

Nonprofit

Categories: Business and Management,

Charitable, cultural, and educational organizations that exist for reasons other than providing a profit for its owners, directors, or members are nonprofit organizations. However, these organizations can generate income to pay for their activities, salaries, and overhead by charging for services, making investments, and soliciting donations and memberships. A nonprofit arts center, for instance, may charge patrons for tickets and event subscriptions. Nonprofits incorporate in the states where they operate and are exempt from the state income taxes that for-profit corporations must pay. Some but not all qualify for federal tax-exempt status under section 501(c)(3) of the internal revenue code. Contributions to those qualifying organizations are tax deductible, though tax rules govern the percentage of your income you may deduct for gifts to different types of nonprofits.In exchange for these tax benefits, nonprofits must comply with some of the same financial reporting rules that for-profit corporations follow. For instance, nonprofits generally must follow corporate governance rules and make their financial reports available to the public.

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