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Calculate the dividend per share to be received

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Reference no: EM133157798

Question - Fritz Corporation has 600,000 shares of preferred stock and 1,800,000 shares of common stock. The cumulative preferred stock has a stated dividend of $2.50 per share. Under normal conditions, the company pays out 30% of earnings available to common shareholders, however, because of a severe recession, Fritz retained all earnings last two year and did not pay any dividends. This year, Fritz earned net income of $6.5 million.

Required -

a) Calculate the dividend per share to be received by the common shareholders this year.

b) Explain how will answer differ if the preferred shares were non cumulative.

Reference no: EM133157798

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