Question

In 2014, Grumpy Company reported a net income of 1,154,073. It declared and paid preferred stock dividends of214,008. During 2014, Grumpy had a weighted average of 180,101 common shares outstanding. Compute Grumpy's 2014 Earnings Per Share.

Answer 1

To compute Grumpy Company's 2014 Earnings Per Share, subtract the preferred stock dividends from the net income and divide by the weighted average of common shares outstanding, resulting in an EPS of $5.22.

Step-by-step explanation:

To calculate Grumpy Company's 2014 Earnings Per Share (EPS), we need to subtract the preferred stock dividends from the net income and then divide that amount by the weighted average of common shares outstanding. Thus, the formula for EPS is:

(Net Income - Preferred Dividends) / Weighted Average Common Shares Outstanding

Using the given figures: ($1,154,073 - $214,008) / 180,101, we calculate Grumpy's 2014 EPS to be:

($940,065) / 180,101 = $5.22 per share