As of December 31, 2008, Biloxi Corporation has 10,000 shares of 8%, $100 par value cumulative preferred

Question:

As of December 31, 2008, Biloxi has 10,000 shares of 8%, $100 cumulative preferred stock outstanding. Biloxi has not paid any dividends to its stock- holders during the past three years.
Required:
(a) What disclosure must Biloxi make in its annual report regarding the unpaid dividends on its preferred stock? What amount will be included in the disclosure, and how was that amount calculated?
(b) Where in Biloxi’s ﬁnancial statements will this disclosure be found?
(c) Why is this disclosure of interest to Biloxi’s preferred and common stockholders?
(d) Assume that in February 2009 Biloxi declares a $500,000 cash How much will be received by Biloxi’s common stockholders? If Biloxi has 250,000 shares of outstanding, what is the amount per common share?
(e) Use the information in part (d). If the market price per common share is $18, what is the yield per common share? How would an investor determine if this yield is ‘‘good’’ or ‘‘bad’’?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...