Accounting problem- ratios

DmanDmythDledge

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?

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

DmanDmythDledge

Nice one.:)

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...