SOURCE OF LONG-TERM FUNDS:

Long-term Debt
Preferred Stock

FINANCIAL MANAGEMENT 2

GROUP 6
SA’DIATUL AKMAWANTI (19059268)
SHATIFA SALSABILA (19059269)
SHINTIA FAJRIN (19059270)
 Preferred Stock

Preferred stock is not traded on a stock exchange. Preferred stock is a combination of debt and common stock
(hybrid financing)
Like stocks: Enter into capital classification Pay dividends Like debt:
2
dividends which amount is fixed (ex: 15% of nominal value). Has priority over assets over common stock.

Preferred stock characteristics:

• Dividends paid are higher than common stock
• Preferred stock usually has a higher priority than common stock in the distribution of dividends and assets (at
the time of liquidation).
• Usually, the income does not change and does not experience an increase in price (lacks capital gain
potential).
• Its value is influenced by interest rates
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Broadly speaking, these preferred shareholders are very influential on the company's
management. The definition of cumulative preferred stock is defined as a type of
preferred stock which refers to ownership of shares with special rights or differentiated
from common stockholders.

Cumulative preferred stock gives the owner the right to distribute dividends that are
cumulative in a certain percentage or amount. These cumulative preferred shareholders
have the advantage of dividends or asset distribution when liquidity.

However, common stockholders have voting rights at shareholder meetings. Meanwhile,

preferred shareholders do not have any voting rights. The similarities between the two
are that holders of common stock or preferred stock are only entitled to receive
dividends if the company makes a profit.
 5 Common Types of Preferred Stocks

1. Convertible 3. Cumulative 5. Adjustable

Preferred Preferred rate preffered
Stock Stock stock

2.
Participating
4. Callable
Preferrd
Preferred Stock
Stock
 Convertible Preferred Stock

Has the feature of converting into common stock of the company. Because they
have conversion options, the holder can potentially benefit from the
appreciation of the price of the common stock. For the record, after converting
them to common stock, we cannot convert back to preferred stock.

Participating Preferred Stock

It is a type of preferred stock in which shareholders receive dividends before they are paid
out to common stockholders. And is preferred over common stock in the event of liquidation.

Cumulative Preferred Share

Cumulative preferred share pays a regular dividend, usually every three
months. When the company does not pay, the amount of dividends owed
will accumulate and must be paid before issuing dividends to preferred
stockholders.
 2. CATALOGUES OF THE HAND ACCOUNT
Callable Preferred Stock
The redemption price may be slightly higher or equal to the
original issue price. Companies pay dividends, like other
forms of equity, but can also HAND ACCOUNT
be repurchased by the issuer,
which is a characteristic of debt securities.

Adjustable-rate Preferred Stock

Is a type of preferred stock that pays variable dividends because it is linked to a specified benchmark,
for example, the yield of the treasury bills. The adjustment rate determination is stated in the prospectus
and may have a maximum and minimization rate because it is linked to a specified benchmark, for
example, the yield of the treasury bills. The determination of the level of adjustment is expressed in a
prospectus and may have the maximum and minimum necessities of life. It is used to record what is
happening in your daily life.
 3. CATALOGUES OF THE HAND ACCOUNT

Such as share rights at the timeS of election of directors so as to pay for the accuracy of
preferred dividen payments so as not to resign, the management tries its best. This
preferred stock has a combination of common stock and bonds, because it can get fixed
income, but there is the possibility of not getting the results that investors want.

Picture
 Advantages of Preferred Stock

To be prioritized in dividend distribution if the

.
company gets turnover. Obtaining bid bids in
various ways, including cumulative preference
share (distribution of dividends at the same time at
the end of the year using the accumulation system
given in the following year.

Participating Preference Share (shareholders are

prioritized over company profits). Not only do
they receive dividends, but shareholders are also
entitled to the remaining company profits. This
copy of preferred stock can provide a dividend
value that is greater than what common stock
holders receive.
Weaknesses of Preferred Stocks
1. Bear the obligations that must be completed to the
company and these shareholders take priority over
ordinary shares.

2. The possibility of getting inexperienced investors due to

pressures of low time and funds so that the price on the
stock exchange will float or drop dramatically.
 PT Raja Sanjaya has set an annual dividend policy of
IDR 216 per common share for good. Currently, PT
Raja Sanjaya's shares are traded on the stock
exchange at a price of Rp 1,350 per share. You
intend to hold onto the stock for good. You intend
to hold onto the stock for good. With a required
rate of retu of 18 & is it profitable to invest in it?

•Answer:

Example = Vs+ D/ks

= Rp 216/0.18
= Rp 1.200 per saham

•Persentase return = Deviden tahunan/cost

= 216 / 1.350 x 100%
= 16
It turns out that the percentage of return is also
lower than the required rate of return.
THANK
YOU