A company has the following shares in issue throughout 2020:

· 12 000 ordinary shares, and 13 000 non-redeemable, 9% discretionary, participating preference shares (at R2 each).

· The company earns a profit after tax of R125000.

· The preference shares participate to the extent of 1:4 of the dividends declared to ordinary shareholders.

· The total ordinary dividend declared for 2020 was R6 000.

· The company declared the full 2020 dividends owing to the preference shareholders.

Required:

Calculate the following:

1. Earnings per ordinary share

2. Earnings per participating preference share

Answer rating: 100% (QA)

Lets proceed with the calculations Step 1 Calculate earnings available to ordinary shareholders Earnings available to ordinary shareholders Profit after tax Total ordinary dividends R125000 R6000 R119000 Step 2 Calculate earnings available to participating preference shareholders Earnings available to participating preference shareholders Total ordinary dividends Participation ratio for preference shares R6000 14 R1500 Step 3 Calculate earnings per ordinary share ... View the full answer