Preferred Dividends

Falls Church Corporation ended the year with revenues of $45,000 and expenses of $33,000. Its stockholders’ equity accounts total $490,000. Which of the following is Falls Church’s return on equity for the year?

a. 9.18%

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b. 6.73%

c. 73.33%

d. 2.45%

Fleming Corporation began and ended the year with 50,000 outstanding shares of common stock net income for the year totaled $480,000. Preferred dividends amounted to $30,000. Which of the following would be Fleming’s basic earnings per share?

a. $9.60 per share

b. $16.00 per share

c. $6.00 per share

d. $9.00 per share

Which of the following would not force a company to compute diluted earnings per share in addition to basic earnings per share?

a. Convertible preferred stock

b. Stock warrants

c. Nonconvertible preferred stock

d. Stock options