National Health Corporation (NHC) has a cumulative preferred stock issue outstanding, which has a stated annual dividend
Question:
National Health Corporation (NHC) has a cumulative preferred stock issue outstanding, which has a stated annual dividend of $9 per share. The company has been losing money and has not paid preferred dividends for the last five years.
There are 300,000 shares of preferred stock outstanding and 600,000 shares of common stock.
a. How much is the company behind in preferred dividends?
b. If NHC earns $11,000,000 in the coming year after taxes and before dividends, and this is all paid out to the preferred shareholders, how much will the company be in arrears (behind in payments)? Keep in mind that the coming year would represent the sixth year.
c. How much, if any, would be available in common stock dividends in the coming year if $11,000,000 is earned as explained in part b?
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...
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Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta