Question

Part 2: Problem solving (15 marks) Problem 1 (4 marks) ABC Corporation had pretax profits of AED 12 million, an average tax rate of 35 % it pid prefered stock dividends of AED 160,000, and common stockholder dividends of AED 250,000. There were 100,000 shares outstanding and no interest expense. What was ABC Corportion's eanings per share EPS and DPS Problem 2 (4 marks) The beta Corporation provided the following financial infomation for the year nding September 30, 2018 Depreciation and amortization S100,000 Net Income $420,000 Increase in fixed assets $95,000. Increase in receivables570o.000 Decrease in inventory$55,000 Decrease in accounts payables $95,000 Increase in marketable securities$47,000. Interest expenses$45,000 Dividends$50,000. Decrease in Long term debt $125,000. Increase in common stocks equities $25,000 What is the cash flow from Investment activities and financing activities generated during this year by the firm?

Answer 1

Problem 1 Amount in AED Profit before Tax 1,200,000 Preferred stock dividend 160,000 Common stockholder 250,000 Shares outstanding 100,000 Tax Rate 35% Net Income 780,000 (AED 1,200,000 * (1-35%) EPS = (net income - preferred stock dividends) = (outstanding shares) EPS = (780,000 - 160,000) / 100,000 shares 6.20 Earnings Per Share = AED 6.20 DPS = Total Dividends paid / outstnading shares DPS = (160,000 + 250,000) / 100,000 4.10 Dividend per share = AED 4.10 Note For remaining questions, please post them separately