A distribution of profits to a class of preferred equity Investors that is made before distributions are made to common equity Investors. Preferred returns can relate to the return of invested capital and/or a percentage-based annual rate paid by the Issuer on the invested capital. The specific terms of the return are specified in the Issuer’s Articles of Incorporation (for a C Corporation) or Operating Agreement (for an LLC). Pertains to equity.

« Back to Glossary Index