Maritime Ferries has 400,000 cumulative preferred shares paying a $1.25 quarterly dividend and has missed three consecutive quarters. Fill the worksheet: the dividend arrears per share, to the cent; and the total that must be paid on the preferred — arrears plus the current quarter — before any common dividend, to the dollar.
Maritime Ferries has 400,000 cumulative preferred shares paying a $1.25 quarterly dividend and has missed three consecutive quarters. Fill the worksheet: the dividend arrears per share, to the cent; and the total that must be paid on the preferred — arrears plus the current quarter — before any common dividend, to the dollar.
Answer
Arrears per share → 3.75 · Total before common (incl. current) → 2000000
Cells - Arrears per share · ±0.005 · unit $ - Total before common (incl. current) · ±1 · unit $ `=3*1.25` = 3.75. `=(3.75+1.25)*400000` = 2,000,000 — the three missed plus the current quarter, on every share. Non-cumulative: no arrears, only the current 500,000.
Bigel, Introduction to Financial Analysis (CC BY 4.0) §2.7 — preferred-vs-common shape only; OpenStax, Introduction to Business (CC BY 4.0) §16.5 — shape only; original issuer and figures