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How to calculate Dividends per ordinary share
All BUT ONE of the following facts is used to calculate Dividends per ordinary share.
Facts given are: Net profit before tax $1,8000,000 Tax rate 30% 10% preference shares per accounts $200,000 Payout ratio for ordinary shares 60% Market price for ordinary shares $3 each Ordinary shares @ $4 each per accounts $1,000,000 I think the 10% prefernce shares isn't required, but how do I work out the answer please? |
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Net profit before tax $1,8000,000
Tax rate 30% - 540,000 Net profit 1,260,000 10% preference dividend $200,000 Profit available for ordinary shares 1,060,000 If market value is $3 per share then the total value is 750,000 Pay out 60% means 750,000 * 60% = 450,000 Dividend per share $450,000/250,000 shares = $1.80 |
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