Earnings per share

Question 1

Types of preference share

Answer 1

• Dividends
• Redemption
• Participating & non-participating shares
• Dividend recognition

Question 2

Dividends

Answer 2

Cumulative: Must pay out before paying ordinary dividends
Non-cumulative: If not paid need not be paid next year

Question 3

Redemption

Answer 3

Redeemable: Capital returned to shareholder
Non-redeemable: Capital not returned

Question 4

Participating shares

Answer 4

The shareholder gets a fixed dividend & a share in the profits

Question 5

Non-participating

Answer 5

The shareholder gets a fixed dividends only

Question 6

Dividend recognition

Answer 6

Interest: if the share is a liability.
Dividend: If the share is equity.
Part interest, part dividend: If the hare is a hybrid equity instrument