Question

Net income $160,000 Preferred dividends $10,000 Shares of common stock outstanding 20,000 Market price per share of common stock $35 The company's earnings per share on common stock is:

Answer 1

The company's earnings per share on common stock is $7.50

Step-by-step explanation:

Given data

Net income N = $160,000

Preferred dividends D = $10,000

common stock outstanding C = 20,000

Market price P = $35 / share

to find out

earnings per share on common stock is

solution

we will find earning per share that is given by

Earnings per share = (net income - preferred dividend ) / common stock outstanding

so now put all these value in this equation we get

Earnings per share = ( 160,000 - 10,000 ) / 20,000

Earnings per share = ( 150,000 ) / 20,000

Earnings per share = 7.5

so The company's earnings per share on common stock is $7.50