Question

Murray Company reports net income of $770,000 for the year. It has no preferred stock, and its weighted-average common shares outstanding is 280,000 shares. Compute its basic earnings per share.

Answer 1

EPS 2.75

Step-by-step explanation:

Earnings per share is measure that investors use to track how much they earning per share invested in stock to calculate it we need net income and shares outstanding

Net income $770 000

Weighted average common Shares 280 000

EPS = net income / Weighted average common Shares

=770000/280000

=2.75

Meaning for every 1 dollar invested in a share earns 2.75 dollars

Answer 2

EPS = $2.75

Step-by-step explanation:

The earning per share is the amount attributable to each ordinary share after the settlement of interest due on loan obligations, tax and preferred dividends.

As it implies it is the measure of the return per unit of ordinary share, and the higher the more profitable the investment

It is determined by the formula below:

Earning per share(EPS)

= Earnings attributable to ordinary shareholders/Units of shares

Earnings attributable to ordinary shareholders

=Net income - preferred dividends

EPS = $770,000 - 0/280,000 units

EPS = $2.75