Hayes Enterprises began 2024 with retained earnings of Tk. 9,28,000, earned Tk. 3,77,000 after taxes, paid preferred dividends of Tk. 47,000, and ended 2024 with retained earnings of Tk. 10,48,000 with 1,40,000 common shares outstanding: prepare the 2024 statement of retained earnings, calculate 2024 EPS, and find the per-share common cash dividend

What you are given and what you must find

This problem links three things: (1) the retained earnings roll-forward, (2) earnings per share for common shareholders, and (3) common dividends per share. The key move is to use the retained earnings equation to solve for total dividends.

(a) Finding total cash dividends from the retained earnings roll-forward

Retained earnings follow:

$$\text{Ending RE} = \text{Beginning RE} + \text{Net income} - \text{Dividends}$$

Plug in the numbers (Tk.):

$$10,48,000 = 9,28,000 + 3,77,000 - \text{Dividends}$$

Solve for dividends:

$$\text{Dividends} = 9,28,000 + 3,77,000 - 10,48,000 = 2,57,000$$

So, total cash dividends paid in 2024 = Tk. 2,57,000.

Now split between preferred and common:

• Preferred dividends = Tk. 47,000
• Common dividends = $2,57,000 - 47,000 = 2,10,000$

Statement of Retained Earnings (Hayes Enterprises)

For the year ended December 31, 2024 (Tk.)

• Retained earnings, beginning (Jan 1, 2024): 9,28,000
• Add: Net income (after taxes): 3,77,000
• Less: Cash dividends
• Preferred: 47,000
• Common: 2,10,000
• Total dividends: 2,57,000
• Retained earnings, ending (Dec 31, 2024): 10,48,000

(b) Calculating 2024 earnings per share (EPS)

EPS for common stock uses income available to common shareholders, so subtract preferred dividends:

$$\text{EPS} = \frac{\text{Net income} - \text{Preferred dividends}}{\text{Common shares outstanding}}$$

$$\text{EPS} = \frac{3,77,000 - 47,000}{1,40,000} = \frac{3,30,000}{1,40,000} = 2.3571 \approx 2.36$$

So, EPS = Tk. 2.36 per common share (approx.).

(c) Common cash dividend per share

Use common dividends divided by common shares:

$$\text{Dividend per common share} = \frac{\text{Common dividends}}{\text{Common shares}} = \frac{2,10,000}{1,40,000} = 1.50$$

So, the firm paid Tk. 1.50 per common share in cash dividends during 2024.