Cobalt Ridge Mining is liquidated. Assets realise 800,000; debt outstanding is 600,000; preferred shares outstanding are $150,000; the rest is common equity. Fill the waterfall: the amount paid to each layer, in dollars, to the exact dollar.
Cobalt Ridge Mining is liquidated. Assets realise 800,000; debt outstanding is 600,000; preferred shares outstanding are $150,000; the rest is common equity. Fill the waterfall: the amount paid to each layer, in dollars, to the exact dollar.
Answer
Creditors → 600000 · Preferred → 150000 · Common → 50000
Cells - Creditors · ±0 · unit $ - Preferred · ±0 · unit $ - Common · ±0 · unit $ Each layer takes the lesser of its claim and what remains. `=MIN(800000,600000)` = 600,000; `=MIN(800000-600000,150000)` = 150,000; `=800000-600000-150000` = 50,000 to common — the residual, not a promise.
Bigel, Introduction to Financial Analysis (CC BY 4.0) §2.6–2.7; OpenStax, Introduction to Business (CC BY 4.0) §16.4 — shapes only