Cookie chronicles and their continuing relevance

Accounting

Due in part that both Curtis' and Natalie's grandparents are older, preferred shares would be advantageous to them in the later stages of their lives. For one, preferred shares offer much strength relative to their common stock counterparts. As a new venture, the risks associated with both Curtis's and Natalie's businesses are many. As such, their grandparents would not want to subject themselves to the vicissitudes of the business operations of the firm. They however, would want to participate meaningfully in the company's prosperity. Preferred shares offer this advantage. First, preferred shares have a higher claim on assets in the event that the company becomes insolvent or bankrupt. When dividends are declared, preferred shareholders are paid prior to common shareholders. In the event of liquidation, preferred shareholders are paid well in advance of common shareholders. This provides both grandparents with added protection in the event of adverse business operations. Finally, in many instances preferred shares often have guaranteed dividend payments attached to them. This allows for a steady stream of income which is not subject to market volatility.

2) an advantage of issuing cumulative preferred is that dividend payments will not occur on regular intervals. This allows the company to adjust dividend policy when business circumstances warrant such change. Overall, this will allow the company to maintain operations in the event that adverse business circumstances prevail. The negative aspect is that these dividends will accrue if left unpaid. As such, if the company does not pay dividends for long periods of time, the accrued payments may become unwieldy for the company. This will have adverse consequences on the firm, as the dividend payments may exceed the amount of cash the firm generates. As such, their may be little money to invest in expansion, organic growth, acquisitions, and so forth. This can potentially be a detriment to the company as they may be unable to pursue business initiatives that may otherwise increase earnings and profitability of the firm. By not pursuing these initiatives, the company is actually limited its overall amount of growth as the company can not fully invest in strategic initiatives.