From Its Inception Through the Year of 2016,Quicksales,Inc

question 203

Multiple Choice

From its inception through the year of 2016,Quicksales,Inc.was profitable and made strong dividend payments each year.In the year 2017,Quicksales had major losses and paid no dividends.In 2018,the company started making large profits again,and they were able to pay dividends to all shareholders-both common and preferred.There are 2,100 shares of cumulative,12% preferred stock outstanding.The preferred stock has a par value of $100.What is the total amount of dividends that should be paid to the preferred stockholders in December,2018?

• A)$75,600
• B)$88
• C)$25,200
• D)$50,400

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Definitions:

Stock Split

An action by a company to divide its existing shares into multiple shares to boost the liquidity of the shares, though the overall value of the shares remains the same.

Retained Earnings

Cumulative earnings of a company that are not distributed to the owners and are reinvested in the business.

2-for-1

Describes a type of stock split where a company divides its existing stock into two shares, effectively doubling the number of shares owned by shareholders but potentially halving the price per share.

Dividend Yield Ratio

A financial ratio that indicates how much a company pays out in dividends each year relative to its share price.