Question

Sales $ 840,000.00

cost of marchandise sold $ 400,000.00
total operating expenses $ 360,000.00
net income after federal income taxes $ 68,000.00
quick assets $ 38,000.00
current assets $ 95,000.00
total assets $ 175,000.00
total liabilities (all current) $ 25,000.00
dividends per share $ 3.00
market price $ 60.00
number of shares outstanding $ 10,000.00

The earnings per share is
(A) $3.00
(B) $14.70
(C) $6.80
(D) 8.1%

Answer 1

The earnings per share (EPS) is calculated by dividing the net income after federal income taxes by the number of shares outstanding, resulting in an EPS of $6.80.

Step-by-step explanation:

Earnings per share:

The earnings per share (EPS) is a key financial metric that indicates the portion of a company's profit allocated to each outstanding share of common stock. To calculate EPS, we divide the net income after federal income taxes by the number of shares outstanding. In this case, the net income is $68,000 and the number of shares outstanding is 10,000. Therefore, the EPS is calculated as $68,000 / 10,000 = $6.80.

The earnings per share can be calculated using the formula: Earnings per Share = (Net Income - Dividends) / Number of Shares Outstanding. Given that the net income after federal income taxes is $68,000.00, and the dividends per share is $3.00 and the number of shares outstanding is 10,000, the calculation is as follows: Earnings per Share = ($68,000.00 - ($3.00 x 10,000)) / 10,000 = $65,000.00 / 10,000 = $6.50. Therefore, the correct answer is (C) $6.80.