From the Following Information, Calculate Todd Ltd's Rate of Return

question 56

Multiple Choice

From the following information, calculate Todd Ltd's rate of return on ordinary shareholders' funds.

Ordinary share capital $600,000.
Retained profits and reserves $200,000.
180,000 fully paid $2.00 10% Preference shares.
Net profit after tax and before preference dividend $276,000.

• A)30.0%.
• B)16.0%.
• C)20.0%.
• D)26.0%.

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Definitions:

Capital Balances

The amount of money invested in a business by its owners plus the retained earnings (or minus the losses).

Profits and Losses

The financial gains and shortfalls incurred by a business during its operations, reflecting the difference between revenues and expenses.

Invests

The action of allocating resources, usually money, with the expectation of generating an income or profit.

Equally

In a manner that divides or distributes something in equal portions or shares.