Dividend Allocation

Question 1

List the order of dividend payment if nonparticipating preferred stock is outstanding

Answer 1

1. )Preferred: dividends in arrears (if cumulative);
2. )Preferred: current period dividend;
3. )Common: remainder

Question 2

List the order of payment for partially participating stocks.

Answer 2

1. )Dividends in arrears;
2. )Current p/s dividend;
3. )Preferred stock receives up to an additional percentage.

Question 3

List the order of dividend payment when partially participating preferred stock is outstanding

Answer 3

1. )Preferred: Any dividends in arrears;
2. )Preferred: Current period dividends;
3. )Common: Preferred percentage x total par outstanding;
4. ) Preferred: Additional percentage of par x remaining div
5. )Common: Remainder

Question 4

What dividends are paid before any other dividends are paid?

Answer 4

Preferred stock dividends in arrears.