Laura & Marty Ltd. did not pay dividends on its 6.5%, $100 par value cumulative preferred stock

Question:

Laura & Marty Ltd. did not pay dividends on its 6.5%, $100 par value cumulative preferred stock during 2018 or 2019. Since 2012, 275,000 shares of this stock have been outstanding. Laura & Marty Ltd. has been profitable in 2020 and is considering a cash dividend on its common stock that would be payable in December 2020.

Required:

Calculate the amount of dividends that would have to be paid on the preferred stock before a cash dividend could be paid to the common stockholders.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...

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