When dividends are unpaid on a cumulative preferred stock, they are referred to as a dividend-in-arrears. Discuss

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When dividends are unpaid on a cumulative preferred stock, they are referred to as a dividend-in-arrears. Discuss why dividends-in-arrears are disclosed as a contingent liability in the footnotes to the financial statements and not as a liability on the balance sheet. What message do dividends-in-arrears convey about the financial health of a business?

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