Question

Zacariah's Nursery has 6,000 shares of stock outstanding at a market price of $20 a share. The earnings per share are $1.54. The firm has total assets of $315,000 and total liabilities of $186,000. Today, the firm is paying an annual cash dividend of $0.80 a share. Ignore taxes. What will the earnings per share be after the dividend is paid? A. $0.31 B. $0.74 C. $1.54 D. $20.70 E. $21.02

Answer 1

C. $1.54

Step-by-step explanation:

The arnings per share is calculate using the net income and dividing it by the outstanding amount of shares.

If the company pays preferred stok dividends these will be discounted, but in this case, it has no information about that, so we should assume this dividend are common stock.

Therefore, do not impact on the earnings per share. So it keeps at 1.54 per share.