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Article: Redeemable preferred stock.
- Article from:
- Business Credit
- Article date:
- October 1, 1992
- Author:
CopyrightCOPYRIGHT 1992 National Association of Credit Management. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Proposed changes in the financial statement classification of redeemable preferred stock could have a large impact on many ratios currently used in evaluating company performance. Credit managers who evaluate financial statement information should be aware of the new proposed changes, as well as the theoretical arguments underlying them.
Redeemable preferred stock is defined as any stock which: (1) the issuer undertakes to redeem at a fixed or determinable price on a fixed or determinable date, (2) is redeemable at the option of the holder, or (3) has conditions for redemption which are not solely within the control of the issuer. The Securities and Exchange ...