Question

In: Accounting

Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark...

Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions. The following disclosure note appeared in the company’s 2021 annual report:

Note 5. Convertible Preferred Stock (in part):
The Company has the following Convertible Preferred Stock outstanding as of September 2021:

Date of issuance: June 17, 2018
Optionally redeemable beginning: June 18, 2020
Par value (gross proceeds): $ 6,000,000
Number of shares: 240,000
Liquidation preference per share: $ 25
Conversion price per share: $ 32.74
Number of common shares in which to be converted: 183,262
Dividend rate: 6.870 %


The Preferred Stock is convertible at any time by the holders into a number of shares of Ozark’s common stock equal to the number of preferred shares being converted times a fraction equal to $25 divided by the conversion price. The conversion prices for the Preferred Stock are subject to customary adjustments in the event of stock splits, stock dividends and certain other distributions on the Common Stock. Cumulative dividends for the Preferred Stock are payable in arrears, when, as, and if declared by the Board of Directors, on March 31, June 30, September 30, and December 31 of each year.

The Preferred Stock is optionally redeemable by the Company beginning on various dates, as listed above, at redemption prices equal to 120% of the liquidation preference. The redemption prices decrease 1% annually thereafter until the redemption price equals the liquidation preference, after which date it remains the liquidation preference.

Required:
1. What amount of dividends is paid annually to a preferred shareholder owning 150 shares of the Series A preferred stock?
2. If dividends are not paid in 2022 and 2023, but are paid in 2024, what amount of dividends will the shareholder receive?
3. If the investor chooses to convert the shares in 2022, how many shares of common stock will the investor receive for his/her 150 shares?
4. If Ozark chooses to redeem the shares on June 18, 2022, what amount will the investor be paid for his/her 150 shares?

Solutions

Expert Solution


Related Solutions

Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions. The following disclosure note appeared in the company’s 2018 annual report: Note 5. Convertible Preferred Stock (in part): The Company has the following Convertible Preferred Stock outstanding as of September 2018: Date of issuance: June 17, 2015 Optionally redeemable beginning: June 18, 2017 Par value (gross proceeds): $ 6,900,000 Number of shares: 230,000 Liquidation preference per share: $ 30 Conversion price per...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions. The following disclosure note appeared in the company’s 2021 annual report: Note 5. Convertible Preferred Stock (in part): The Company has the following Convertible Preferred Stock outstanding as of September 2021: Date of issuance: June 17, 2018 Optionally redeemable beginning: June 18, 2020 Par value (gross proceeds): $ 3,750,000 Number of shares: 150,000 Liquidation preference per share: $ 25 Conversion price per...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions. The following disclosure note appeared in the company’s 2021 annual report: Note 5. Convertible Preferred Stock (in part): The Company has the following Convertible Preferred Stock outstanding as of September 2021: Date of issuance: June 17, 2018 Optionally redeemable beginning: June 18, 2020 Par value (gross proceeds): $ 2,800,000 Number of shares: 140,000 Liquidation preference per share: $ 20 Conversion price per...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions. The following disclosure note appeared in the company’s 2018 annual report: Note 5. Convertible Preferred Stock (in part): The Company has the following Convertible Preferred Stock outstanding as of September 2018: Date of issuance: June 17, 2015 Optionally redeemable beginning: June 18, 2017 Par value (gross proceeds): $ 2,800,000 Number of shares: 140,000 Liquidation preference per share: $ 20 Conversion price per...
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions
Ozark Distributing Company is primarily engaged in the wholesale distribution of consumer products in the Ozark Mountain regions. The following disclosure note appeared in the company’s 2018 annual report: Note 5. Convertible Preferred Stock (in part): The Company has the following Convertible Preferred Stock outstanding as of September 2018: Date of issuance: June 17, 2015 Optionally redeemable beginning: June 18, 2017 Par value (gross proceeds): $ 2,500,000 Number of shares: 100,000 Liquidation preference per share: $ 25.00 Conversion price per...
A company is engaged in the manufacture of certain leather consumer products. The products are shoes,...
A company is engaged in the manufacture of certain leather consumer products. The products are shoes, ladies leather hand bags, purses and belts. The company accounted for about 10% of the market share in shoes, which is its main product. Since last year, the company has been facing stiff competition from another firm which has come up recently in the city. This is reflected in the declining monthly sale. The company is concerned over this development and would like to...
QUESTION 1 KataranaSdnBhd operates a business in the wholesale distribution of consumer products. You are one...
QUESTION 1 KataranaSdnBhd operates a business in the wholesale distribution of consumer products. You are one of the auditors attached to Vijay Salleh& Associates who has been appointed to audit KataranaSdnBhd's financial statements for the financial year ended 31 December 2018. Your team leader has assigned you to review the company's sales system. Your observations are as follows: Sales Department The sales department directly receives orders from both regular and new customers. For regular customers, Encik Faizal, who is the...
An ergonomics consultant is engaged by a consumer products company to see what they can do...
An ergonomics consultant is engaged by a consumer products company to see what they can do to increase productivity. The consultant recommends an “employee athlete” program, encouraging every employee to devote five minutes an hour to physical activity. The company decides to try this program. To measure the difference in productivity, they measure the average number of keystrokes per hour of 23 employees before and after the five-minutes-per-hour program is instituted. The data follow: Before After Difference (After – Before)...
IGF Foods Company is a large, primarily domestic, consumer foods company involved in the manufacture, distribution, and sale
IGF Foods Company is a large, primarily domestic, consumer foods company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy’s The Almanac of Business and Industrial Financial Ratios and Dun and Bradstreet’s Industry Norms and Key Business Ratios. Following are the 2021 and 2020 comparative income statements and balance sheets for IGF. The market price of IGF’s common stock is $47 during 2021. (The financial data we use are from...
AMC Distributors is a limited company engaged in the manufacturing and distribution of paper products which...
AMC Distributors is a limited company engaged in the manufacturing and distribution of paper products which are considered fast-moving consumer goods. The company had recently undertaken a successful total quality management (TQM) project to improve its manufacturing efficiency, expedite vendor payments and increase availability of finished products. For its next project, the company wanted to address problems in human resources (HR). By working with HR process owners, a focus for the project emerged – the payroll process. Staffing – the...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT