Q.Justify the following statement.
Equity shares get last priority in dividend.

Equity shareholders are last in the queue for dividend because they are owners, not creditors. Their return comes only after all fixed claims — interest and preference dividend — have been satisfied, which justifies the statement.

The order in which a company distributes its earnings follows the principle that those who take the least risk are paid first, and the owners who take the most risk are paid last.

Why equity shares get last priority:

• Equity shareholders are owners: They own the company and bear the highest risk, so in return they are the last to be paid but stand to gain most when profits are high.
• Prior claims come first: From the company's earnings, interest to lenders and debenture-holders (a charge against profit) is paid first, as it is a fixed and compulsory payment.
• Preference before equity: Preference shareholders then receive their dividend at a fixed rate before any dividend is given to equity shareholders. That is the very meaning of 'preference'. …