A delivery company would like to capitalise on its recent success and expand into a new geographic area after having a very successful two years.
The company does not have enough cash to fund this expansion and is seeking external finance. One of the directors has been advised to think about issuing some preference shares since she will be able to maintain control over her company.

Explain the difference between preference and ordinary shares from the point of view of the delivery company.

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2. You have been provided with the following information regarding the ALG Mfg Company: Sales price Variable manufacturing cost per unit 12 Variable marketing cost per unit Fixed manufacturing costs Fixed administrative costs $ 25 3 180,223 40,000 This information is based on forecasted sales of 25,000 units. (a) What are the expected operating profits for the upcoming year? (b) What is the break-even point in units? (c) What is the break-even point in dollars? (d) If $80,000 of operating profits is desired, how many units must be sold? (e) How much in sales dollars is required to generate an operating profit of $75,000? 2. You have been provided with the following information regarding the ALG Mfg Company: Sales price Variable manufacturing cost per unit 12 Variable marketing cost per unit Fixed manufacturing costs Fixed administrative costs $ 25 3 180,223 40,000 This information is based on forecasted sales of 25,000 units. (a) What are the expected operating profits for the upcoming year? (b) What is the break-even point in units? (c) What is the break-even point in dollars? (d) If $80,000 of operating profits is desired, how many units must be sold? (e) How much in sales dollars is required to generate an operating profit of $75,000?

Answer rating: 100% (QA)

Preference shares have fixed dividends payable on each share whereas ordinary shares do not Preferen... View the full answer