National Health Corporation (NHC) has a cumulative preferred stock issue outstanding, which has a stated annual dividend of $9 per share. The company has been losing money and has not paid preferred dividends for the last five years. There are 360,000 shares of preferred stock outstanding and 660,000 shares of common stock.
To calculate the amount of unpaid dividends on NHC's cumulative preferred stock, you need to multiply the stated annual dividend per share by the number of shares outstanding and the number of years the dividends have gone unpaid.
In this case, NHC has 360,000 shares of preferred stock outstanding and a stated annual dividend of $9 per share. The preferred dividends have not been paid for the last five years.
To calculate the total unpaid dividends, you can use the following formula:
Unpaid Dividends = Stated Annual Dividend per Share * Number of Shares Outstanding * Number of Years
Unpaid Dividends = $9 * 360,000 * 5
Unpaid Dividends = $1,620,000
Therefore, the total unpaid dividends on NHC's cumulative preferred stock is $1,620,000.