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    pollycat's Avatar
    pollycat Posts: 1, Reputation: 1
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    #1

    Oct 18, 2013, 11:10 PM
    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?
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
     
    #2

    Oct 20, 2013, 05:51 AM
    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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