Question

Reddaway Corporation reports the following information:

Net income $500,000
Dividends on common stock 140,000
Dividends on preferred stock 60,000
Weighted average common shares outstanding 100,000

Reddaway should report earnings per share of:

3.00
3.60
4.40
5.00

Answer 1

The earnings per share (EPS) for Reddaway Corporation should be $5.00.

Step-by-step explanation:

To calculate the earnings per share (EPS) for Reddaway Corporation, you need to divide the net income by the weighted average common shares outstanding. Here's how you do it:

EPS = Net income / Weighted average common shares outstanding

EPS = $500,000 / 100,000

EPS = $5.00

Therefore, Reddaway should report earnings per share of $5.00.