RE:RE:TD Trouble?new found wealth----- good credit rating ---or iou notes or---------------------------------
-Equity holders borrow capital under the corporate umbrella that has a tax when it’s paid back by the corporation. The company purchases goods and services that has a tax capital cost that maybe deferred against future earnings. The company has no earnings or not enough of it so they sell the tax credit derived by there capital expenditures creating a revenue. Revenue is not profit . There is a distinct deference. This action allows the company too leverage there borrowed capital tax cost selling it too the public through the common public stock market.
It’s debt that is payable before equity debt but not the equity it self . The the common share debt is often referred to as second tier equity debt while third tier debt is held by the equity holders them self and any subsequent first tier debt ie: bonds. First tier debt that is collateralized firstly the 3rd tier equity then the second tier equity of the common shareholders.