Who Has The First Claim To The Profits Or Assets Of A Firm? A. Lenders B. Stockholders C. Owners

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Steven Vakula Profile
Steven Vakula answered
Lenders are individuals or entities that provide financing to a company, They have no ownership interest unless certain type of debenture documents have been used. Loans and financing of a companies operations need to be paid before any reported profits are truly paid because until the loan is paid back there is on going liabilities and expenses that will reduce future profits. Once lenders have been paid then you are able to distribute profits to the owners of the company. Since owners can be made-up of individuals or shareholders the two are actually the same depending on how the company organization structure is formed. There can be preferred shareholder which are entitled to profit distribution be for and common shareholder bur essentially the common shareholder is the final payout or if the company is not a corporation it would be the owners.
amber Jhon Profile
amber Jhon answered
The first claim on the profits and the assets of the firm can be made by lenders. The reason is that lenders are the people who has invested in the company by lending some money to the owners. If the company goes for liquidation or it goes for bankruptcy then lenders (who lend money which comes under the liability section in the balance sheet) are the first claimers of profits and assets. The second claim can be made by stockholders because they have the share on the profits and assets of the company. Shareholders are also considered as the owners of the company, therefore, option B and C are same.

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