Preferred stock refers to a class of stock that ranks higher than common stock. In case the company decides to pay dividends the preferred shareholders are paid before common stockholders. In case of bankruptcy as well preferred shareholders are entitled to be paid from the company’s assets before common stockholders get any compensation. However, the downside is that while common stockholders have the right to vote on company policy, preferred stockholders do not get to do the same.

Total preferred shares outstanding refers to the sum of total shares of preferred stock of the company.