Question

JKL Corporation Ltd reported net operating income before taxation of $1,000,000 for the 31 December 2014. The tax rate was 40%. As of January 1, 2014, 200,000 shares of common stock were outstanding.

What was JKL Corporation Ltd's earnings per share (EPS) for the year ended December 31, 2014?
a. $2.00
b. $2.50
c. $3.00
d. $3.50

Answer 1

To calculate the earnings per share (EPS) for JKL Corporation Ltd, divide the net operating income after tax by the number of shares outstanding. The EPS for the year ended December 31, 2014 was $3.00.

Step-by-step explanation:

Earnings Per Share (EPS) Calculation:

To calculate the earnings per share (EPS) for JKL Corporation Ltd, you need to divide the net operating income before taxation by the number of shares outstanding.

Step 1:

Calculate the net income after tax by multiplying the net operating income by (1 - tax rate).

Net income after tax = $1,000,000 x (1 - 0.40) = $600,000

Step 2:

Divide the net income after tax by the number of shares outstanding.

EPS = $600,000 / 200,000 = $3.00

Answer:

JKL Corporation Ltd's earnings per share (EPS) for the year ended December 31, 2014 was $3.00 (option c).