Calculate total number of ordinary shares, Finance Basics

Calculate total number of ordinary shares

Example

Company XYZ Ltd has sold 10,000 ordinary shares of Shs.30 as partly called up plus 20,000 Shs.45 preference shares, that are convertible. Calculate the total number of ordinary shares after conversion.

Solution

Conversion ratio = 30/45 = 2/3 for every 2 preference shares you get 3 ordinary shares.

(20,000/1)*(3/1) = 30,000 ordinary shares

Conversion price = 45/(3/2)=Shs30

Total = 40,000 ordinary shares after conversion.

Posted Date: 1/29/2013 4:26:32 AM | Location : United States







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