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Re: contrarian bull post# 569325

Thursday, 10/10/2019 10:49:52 AM

Thursday, October 10, 2019 10:49:52 AM

Post# of 790520

Is it generally accepted accounting principles to not count all preferred stock liquidation value against net worth?



Just look at the balance sheet. If you see a positive number in the equity section, that line contributes positive value towards net worth. As in, deleting that item would cause net worth to go down.

Preferred stock is, in every case I have ever seen (including FnF), a positive number on the balance sheet in the equity section.

I always thought that it should not only count against shareholder value, but against net worth too.



Stop thinking of preferred shares of liabilities, and instead think of them for what they are: equity. They add to net worth rather than counting against it. Net worth and equity are the same on the balance sheet, each one is equal to total assets minus total liabilities.

It makes more sense when you realize that preferred shareholders are shareholders themselves. Therefore, when you talk about "shareholder value", that includes preferred shareholders.