Question

If a company has net income of $8,500,000, average shares of common stock outstanding of 2,000,000, average total stockholders' equity of $154,400,000, and annual preferred stock dividends of $1,500,000, what is its EPS?

Answer 1

The earnings per share (EPS) for the company is $4.25.

Step-by-step explanation:

To calculate the earnings per share (EPS), we need to divide the net income by the average shares of common stock outstanding. In this case, the net income is $8,500,000 and the average shares of common stock outstanding are 2,000,000. So the EPS is calculated as follows:

EPS = Net Income / Average Shares of Common Stock Outstanding

EPS = $8,500,000 / 2,000,000

EPS = $4.25

Therefore, the EPS for this company is $4.25.