Business Week (October 2, 1989) notes that Rupert Murdoch’s company, News Corp., is rapidly approaching limits on its ability to borrow, as indicated by covenants imposed by the large group of banks that have provided most of the company’s financing. An executive close to News Corp. commented that “Murdoch has several ways he can raise off-balance-sheet debt or reduce News Corp.’s debt. One favorite ploy: News Corp. has often raised cash by selling 638 Part 4 Liabilities and Stockholders’ Equity: A Closer Look “preference,” or preferred shares. Fully $1.4 billion worth of such shares were outstanding on June 30 ...” REQUIRED: Describe the nature of preferred shares and explain how raising cash by selling them can be interpreted as off-balance-sheet financing. Why would Murdoch pursue such an activity, and how might a creditor adjust the reported financial statements to make them more representa¬ tive of News Corp.’s financial position?