Question

Presented below is financial information related to Finney Company Sales revenues €950,000 Income from continuing operations 120,000 Comprehensive income 140,000 Net income 105,000 Income from operations 260,000 Selling and administrative expenses 600,000 Income before income tax 240,000 Number of ordinary shares 10,000 Instructions Compute the following

(a) income tax,
(b) discontinued operations,
(C) earning per share

Answer 1

Finney Company's income tax is €120,000, its discontinued operations indicate a loss of €15,000, and the earnings per share (EPS) is €10.50.

Step-by-step explanation:

To compute the financial metrics for Finney Company, given the provided data, we follow the below steps:

1. Income tax: This is calculated by subtracting Income from continuing operations from Income before income tax. Therefore, income tax is €240,000 - €120,000 = €120,000.
2. Discontinued operations: Discontinued operations are found by deducting Income from continuing operations from Net income. As such, discontinued operations amount to €105,000 - €120,000 = -€15,000, indicating a loss from discontinued operations.
3. Earnings per share (EPS): EPS is a measure of the company's profitability on a per-share basis, calculated by dividing Net income by the Number of ordinary shares. Therefore, EPS is €105,000 / 10,000 shares = €10.50 per share.

These computations provide a clearer financial picture of Finney Company's performance over the period in question.