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Cumulative Preferred Stock: Formula & Examples

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What is the correct order that shareholders receive dividends?

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1. Suppose cumulative preferred stock with a 10% dividend rate and a $1,000 par has been issued. The corporation has not paid dividends in the current or past two years. What is the amount of preferred dividends that must be paid before the common shareholders are paid any dividends?

2. Suppose non-cumulative preferred stock has a 10% dividend rate and a $1,000 par. The corporation has not paid dividends in the current year or the past three years. What is the amount of preferred dividends that must be paid before the common shareholders are paid any dividends?

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About This Quiz & Worksheet

Use the worksheet and quiz to determine how much you know about cumulative preferred stock. Its formula and examples are topics on the quiz.

Quiz & Worksheet Goals

Take the quiz to see how familiar you are with:

  • The correct order that shareholders receive dividends
  • Dividends in arrears
  • Formula for calculating cumulative preferred stock

Skills Practiced

  • Information recall - access the knowledge you have gained about non-cumulative preferred stock
  • Reading comprehension - ensure that you draw the most important information from the lesson on cumulative preferred stock
  • Knowledge application - use your knowledge to answer questions about calculating preferred dividends

Additional Learning

If you would like to keep reviewing, access the lesson called Cumulative Preferred Stock: Formula & Examples. Other topics you can analyze include:

  • Differences between cumulative and non-cumulative preferred stock
  • The meaning of preferred stock
  • Benefits of cumulative preferred stock
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