Question

In 2017, Moreno Cheeses had a net income of $42,390, paid preferred dividends of $6,000 and 18,000 shares of common stock outstanding. What was their earnings per share for 2017?a) $1.69 b) $2.69 c) $2.02 d) $2.36

Answer 1

Option c.

Explanation:

In 2017, Moreno Cheeses had a net income of $42,390, paid preferred dividends of $6,000.

value of the shares = Net income - preferred dividends

= 42,390 - 6,000

= $36,390

To find their earnings per share =
`\frac{\text{Value of the shares}}{\text{total number of shares}}`

=
`(36,390)/(1,8000)`

= $2.02 per share

Option c) $2.02 per share