Financial managements, lecture three, educational

        We continue with lecture three of financial managements, assets and liabilities. Let's see what we have residual claim, stockholders equity, represent the residual claim so that let's explain the residual claim, all liability are claims on assets some has higher claim some has lower claims, higher claims like having more employees, utilities, assets, and government taxes might be high claim. You can order different claim by priority. Who has a higher cash, the first highest priority, the second highest priority, the third highest priority, and the question is that who has the lowest priority?

        The lowest priority all has common stock holds. In the residual the company pays all the expenses all of the costs and what is remained is given to the stock holders as a residual, it is the residual claim of the company. The equity and you become the owner of the company, you take risk because you invest in the company and everybody else who invest take risk. The profit means after you pain all as you have duty for what is remained is your profit. And residual claim comes from what we have in accounting what is called balance sheet equation, or they call it sometimes, fundamental equation.

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