Answer:
d. All of these are correct
Explanation:
Equity represents the value of an ownership interest in a company. It is what remains for the owners of a business after all the debts incurred to run the business have been paid.
The structuring the ownership of equity of a business involves determining how much to have as common stock, preferred stock, or retained earnings.
Common stock is an ownership in a company in which the holders are the ones that elect the board of directors, vote on corporate policies. Although they are paid last after settling other stakeholders in the business, the holders of common stock receive higher rates of return in the long term.
Preferred stock also represents ownership interest in a firm. Holders of preferred stocks receive dividend before common stockholders when dividends are being paid, and they receive higher rates of return in the short term.
Retained earnings are profits or earnings that are not distributed to stockholders in form of dividends. They are usually kept to serve as a buffer in running the organisation.
The sum of the common stock, preferred stock and retained earnings are given as total equity on the balance sheet of a company.
The objective of structuring the ownership equity are to ensure rights of each founder who the stockholders are protected, give incentives to all stakeholders to work hard, and to distribute rewards which is usually rate of returns or share of profit fairly.
Therefore, all the options in the question are correct.
