From the following information, calculate Todd Ltd's rate of return on ordinary shareholders' funds.

Ordinary share capital $600,000.
Retained profits and reserves $200,000.
180,000 fully paid $2.00 10% Preference shares.
Net profit after tax and before preference dividend $276,000.
A)30.0%.
B)16.0%.
C)20.0%.
D)26.0%.

Question

From the following information, calculate Todd Ltd's rate of return on ordinary shareholders' funds.

Ordinary share capital $600,000.
Retained profits and reserves $200,000.
180,000 fully paid $2.00 10% Preference shares.
Net profit after tax and before preference dividend $276,000.
A)30.0%.
B)16.0%.
C)20.0%.
D)26.0%.

Quizplus · Accepted Answer

Rate of return on ordinary shareholders' funds = Net profit after tax and before preference dividend / (Ordinary share capital + Retained profits and reserves) * 100= 276,000 / (600,000 + 200,000) * 100= 276,000 / 800,000 * 100= 30%

From the Following Information, Calculate Todd Ltd's Rate of Return