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Apologies, if this question is posted wrongly. I am unable to resolve this below.
A company wishes to pay the maximum possible dividend in respect of a year during which it earned a net profit after tax $30000. the company has issued 20000($1 each) 10% preference shares and 50000($1 each) ordinary shares. if $8000is to be transferred to general reserve. What ordinary dividend to be paid in percentage terms?
Out of the profit of $30,000, they will pay $2,000 (10% x 20,000) as preference dividend, and will transfer $8,000 to a general reserve.
That leaves $20,000 that can be paid as an ordinary dividend, which is % terms is 20,000 / 50,000 = 40%
Thanks, John, seems the language was a bit confusing to me.
Really appreciate it.
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