Question

Draiman Inc. has sales of $593,000, costs of $265,000, depreciation expense of of $67,000, interest expense of $34,000, and a tax rate of 35 percent. The firm paid out $40,000 in dividends and has 48,000 shares of common stock outstanding. What is earnings per share figure? What is the dividends per share figure?

Answer 1

Draiman Inc. has an earnings per share (EPS) of approximately $3.07 and a dividends per share (DPS) of approximately $0.83. These figures were calculated using the company's provided financial information, including net income and the number of common shares outstanding.

Step-by-step explanation:

To calculate earnings per share (EPS) for Draiman Inc., we start with the net income formula:

• Sales - Costs - Depreciation - Interest = Taxable Income
• Taxable Income - Taxes = Net Income

Using the given figures:

• $593,000 - $265,000 - $67,000 - $34,000 = $227,000 (Taxable Income)
• $227,000 - ($227,000 x 35%) = $227,000 - $79,450 = $147,550 (Net Income)

Now, we divide the Net Income by the number of shares outstanding to get EPS:

• Earnings Per Share = Net Income / Shares Outstanding
• Earnings Per Share = $147,550 / 48,000
• Earnings Per Share = approximately $3.07

To find the dividends per share (DPS), we divide the total dividends by the number of shares outstanding:

• Dividends Per Share = Total Dividends / Shares Outstanding
• Dividends Per Share = $40,000 / 48,000
• Dividends Per Share = approximately $0.83

Therefore, the EPS for Draiman Inc. is approximately $3.07, and the DPS is approximately $0.83 per share.