The board of directors of Picasso Manufacturing, Inc., may declare a dividend this year but has not declared a dividend for past two years. The corporation has $800,000 shares of $1 par common stock authorized and $160,000 shares issued and outstanding. It also has $300,000 shares of 5%, $10 par cumulative preferred stock authorized, of which 55,000 shares are issued and 50,000 shares are outstanding. Compute the amount of dividends available for common and preferred shareholders if the dividend declaration is $75,000.
2007-02-01 07:02:21 · 4 answers · asked by GSU 1 in Business & Finance ➔ Investing
Cumulative preferred has to be paid all back dividends and the present dividend before anyone else gets theirs.
2007-02-01 07:30:01 · answer #1 · answered by dashel_gabelli 3 · 0⤊ 0⤋
Why? Is it a homework problem and you don't want to do the math?
BTW, what's with all the "par" stuff? That is usually ignored in normal market valuations and yield computations. All the par tells me is if the stock is selling for 50 cents but the par was $1, then the company hasn't done well since it went public. You don't have "$300,000 shares" or "$160,000 shares", you have a number of shares and the dollar value is a separate issue. Now if you have preferred stock and the yield is a percentage of par price, that is one thing, but the market assigns value after issue.
2007-02-01 09:08:06 · answer #2 · answered by Rabbit 7 · 0⤊ 1⤋
They did not pay the preferred dividend for the past 2 years? They owe a total of 3 years of preferred dividends? Then the entire $75,000 goes to the preferred share holders. $500,000 x .05 x 3 = $75,000
2007-02-01 07:13:50 · answer #3 · answered by Anonymous · 1⤊ 0⤋
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2016-11-23 20:52:10 · answer #4 · answered by Anonymous · 0⤊ 0⤋