Question

Dakota Inc. and Jersey & Company are two large companies that manufacture and sell equipment used in the construction, mining, agricultural, and forestry industries. The companies reported the following data (in millions) for two recent years:

Dakota Jersey
Year 2 Year 1 Year 2 Year 1
Net income $2,182 $3,715 $1,925 $3,187
Average number of common shares outstanding 594 599 334 363

Required:
a. Determine the earnings per share in Year 2 and Year 1 for each company. Round your answers to two decimal places.

Answer 1

Answer and Explanation:

The computation of the earning per share is shown below:

As we know that

Earning per share = Net income ÷ Average number of common shares outstanding

For year 1

Dakota

= $3,715 ÷ 599 shares

= $5.30 per share

Jersey

= $3,187 ÷ 363 shares

= $8.78 per share

For year 2

Dakota

= $2,182 ÷ 594 shares

= $3.67 per share

Jersey

= $1,925 ÷ 334 shares

= $5.76 per share