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Accounting problem- ratios

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  • 30-05-2008 1:06pm
    #1
    DmanDmythDledge
    Registered Users Posts: 883 ✭✭✭


    Doing the 2007 Q5 HL and am having trouble working out the dividend per share. The formula I have is:

    Total dividend - preference dividend
    No. of ordinary shares issued

    Stuff at the top of the question says:

    "Mila Plc. has an authorised capital of €900,000 made up of 650,000 ordinary shares at €1 each and 250,000 6% preference shares at €1 each. The firm has already issued 325,000 ordinary shares and all the preference shares."

    In the question:

    Proposed dividends= €31,000
    Ordinary shares= €325,000
    Preference shares= €250,000.

    Using the formula I got:

    900,000 - 250,000 = 2
    325,000

    but the correct answer should be 4.92. Anyone know where I am going wrong?


Comments

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    #2
    skylane
    Closed Accounts Posts: 1 ✭skylane


    Total dividend= 31000
    prefernce dividend= 250000 x 6%=15000


    Total dividend - prefrence dividend = 31000-15000=16000
    Number of issued ordinary shares =325000

    16000 divided by 325000=0.04923077 or 4.92 cent


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    #3
    DmanDmythDledge
    Registered Users Posts: 883 ✭✭✭DmanDmythDledge


    Nice one.:)


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    #4
    Mars Bar
    Registered Users Posts: 31,824 ✭✭✭✭Mars Bar


    We say proposed div-pref div over no. of ord.shares ...I think it's easier to remember and makes it easier to find the prop divs...


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