Question

A firm reports a net margin of 5.00%. The firm has 1,456,800.00 million shares outstanding. The firm has invested in a new product that will increase sales by $4,898,300.00 million this year. What will be the increase in earnings this year if the sales increase occurs?

Answer 1

To find Earning per share, we can find this by the following formula:

Increase in Earnings Per Share = Net profit of new products / Number of shares

and

Net Profit of new products = 5% * $4,898,300 = $244,915

Increase in Earnings Per Share = ($244,915) / 1,456,800 = 16.81%