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.