Chapter 13, Problem 5APSA

1. Par Value of Equity and Preferred Shares.

To determine

Concept Introduction:

Preferred Shares and Common Shares:

Preferred Shares are Shares which have first preference over common shareholders, with respect to dividends and assets, in the case of wind up.

Requirement 1

Par value of Preferred Shares and Common Shares

2. Book Value of Common Share.

To determine

Concept Introduction:

Book Value of Common Shares:

Book Value of Common Shares, is the total of Shareholders Equity Excluding Preference Shares, Divided by total number of common shares.

Requirement 2

Book Value of Common Shares

3. Book Value per share after considering Preferred dividends in arrears.

To determine

Concept Introduction:

Book Value of Common Shares:

Book Value of Common Shares, is the total of Shareholders Equity Excluding Preference Shares, Divided by total number of common shares.

Requirement 3

Book Value per Share after considering Dividends in arrears.

4. Preferred Stock Dividend

To determine

Concept Introduction:

Preferred Stock Dividend

Preferred Stock dividend has been pre agreed upon. At times if preferred shares are cumulative, dividends in arrears will be accumulated and paid out before common shareholders when dividends are declared. In case of non cumulative shares, Dividends in arrears will not be carried forward, but if dividends are declared first preference will be given to Preference shareholders.

Requirement 4

Preferred Share Dividend