Question

At December 31,2024, Oriole Company had 192000 shares of common stock and 9200 shares of 5%,$100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2024 or 2025. On February 10 , 2026 , before the issuance of its financial statements for the year ended December 31,2025 , Oriole declared a 100% stock dividend on its common stock. Net income for 2025 was $954000. In its 2025 financial statements, Oriole will report earnings per share of

Answer 1

The calculation of Oriole Company's earnings per share for 2025 involves deducting any dividends on preferred stock from the net income and dividing by the adjusted number of common shares after accounting for stock dividends.

Step-by-step explanation:

The question concerns how Oriole Company will calculate and report earnings per share (EPS) in its financial statements for the year ended December 31, 2025.

The company has both common and preferred stock outstanding, and it has not declared dividends in the past two years. The calculation of EPS becomes more complex with the declaration of a 100% stock dividend in early 2026. We consider the cumulative preferred dividends that have not been paid when calculating EPS for common stockholders.

However, without specified dates for when the financial statements are issued and whether the preferred dividends for 2025 were declared, we cannot provide an exact EPS figure. Approaches to this can vary, with some analysts adding the undeclared preferred dividends for both years to the net income and then dividing by the weighted average shares after considering the stock dividend, while others may only consider the 2025 arrears.