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itspatpatt
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| Posted: 04 Apr 2011 at 22:54 | IP Logged
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Hello.
I cant find the answer to this ANYWHERE and its killing me. How do I calculate preferred dividends if the preferedd stock is given in the middle of the period.
I am trying to calculated basic eps but the preferedd stock was given in the middle of the year i.e. July 1 year 1 with period end at Dec 31 year 1.
I am thinking that the preferedd dividends for the whole year multipled by 6/12 (months that they were outstanding) but am not sure
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tkphotomania
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| Posted: 04 Apr 2011 at 23:45 | IP Logged
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You are trying to get basic EPS, correct?
Net income - preferred dividends for the whole year
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Weighted-average numbers of common stock shares outstanding
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mmilito
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| Posted: 05 Apr 2011 at 00:01 | IP Logged
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No I think what he means is do we use a weighted method for the preferred dividends in the numerator, in which case no, we would be using the regular method of dividends, remember dividends are not like the equity method of accounting, it doesn't matter when the stock was purchased. For example, if I purchased stock in MMilito Corp. the day before the "rollcall" (I forgot was it was called that date, its irrelevant because no entry is made on that date otherwise) I would still be entitled to that entire dividend. This also applies to preferred CUMULATIVE (that's important remember its still taken out of net income if declared or not) stock.
....Upon further review...Basically I gave an elonggated explaination of the previous post...sorry I misread the previous post
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Topic: HELP How to calculate pref dividends
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