Wednesday, April 25, 2012

Practice Earnings Per Share EPS Problem

Practice Calculating Earnings Per Share (EPS) with this Problem:

A small retail company had 20,000 shares of common stock issued to the public and 2,000 shares of 10%, $100 par value cumulative preferred stock that has been issued to selective investors. During the current financial accounting year, no dividends on common stock were declared by the company and the preferred stock paid its dividend.

Overall Net income was $2,000,000 for the entire year. What is the small retail company's basic earnings per share (EPS) ?

$2,000,000 - ( $20,000 x $100 Par Value x 10% )] / $200,000 = $9 Earnings Per Share (EPS)

The small retail company had EPS of $9

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