Ivanhoe Transport Dividend Distribution Calculation

How much of the declared dividends will be received by the preferred stockholders?

Preferred stockholders of Ivanhoe Transport will receive $5,000 out of the total $13,000 dividends declared in 2022.

Calculation Explanation:

Preferred stockholders will receive $5,000 of the $13,000 dividends declared in 2022. This calculation is based on the 5% cumulative preferred stock that Ivanhoe has outstanding.

The cumulative preferred stock is entitled to receive a fixed dividend amount before any dividends can be paid to common stockholders.

Ivanhoe Transport has the following stock outstanding at December 31, 2022:

• 5% Cumulative preferred stock, $11.40 Par $37,620
• Common stock, $0.10 Par 12,000

Ivanhoe paid no dividends during 2021. During 2022, it declares $13,000 of dividends.

To calculate the preferred stockholders' share of the declared dividends, we need to determine the total accumulated dividend for the preferred stock. Since Ivanhoe did not pay any dividends in 2021, the accumulated dividends for 2022 will equal the cumulative preferred stock value, which is $37,620.

The 5% dividend rate on the preferred stock means that preferred stockholders are entitled to receive 5% of the par value each year. The annual dividend per share is $0.57 ($11.40 x 5%). Therefore, the preferred stockholders' accumulated dividend for 2022 is $5,000 ($0.57 x 8,800 shares).

Thus, out of the $13,000 dividends declared in 2022, preferred stockholders will receive $5,000, and the remaining $8,000 will be available for distribution to common stockholders.

By understanding the dividend distribution calculations, investors can gain insights into how dividends are allocated to different types of stockholders in a company.