Question

Darby's company reported net income after taxes of $2,000,000, on sales of $225 million. her boss asked her to calculate the earnings per share for stockholders. darby noted that the company's balance sheet showed 44 million shares outstanding. to explain to him that her calculation is correct, darby's correct response is

Answer 1

Darby's correct response is $0.045 per share.
Because we can calculate earnings per share by taking net income after taxes and then dividing it by the total number of common shares that are issued.
Income after taxes = $2,000,000
shares = $44,000,000
Earnings per share = $2,000,000 / $44,000,000
=$2/$44
=$0.045