Question

inancial information for Forever 18 includes the following selected data: ($ in millions except share data) 2021 2020 Net income $ 207 $ 124 Dividends on preferred stock $ 32 $ 23 Average shares outstanding (in millions) 300 200 Stock price $ 11.37 $ 10.32 Required: 1-a. Calculate earnings per share in 2020 and 2021. (Enter your answers in millions (i.e. 5,500,000 should be entered as 5.5).)

Answer 1

$0.51 per share and $0.58 per share

Step-by-step explanation:

The computation of the earning per share is shown below:

As we know that

Earning per share = (Net income - Dividends on preferred stock) ÷ (Average shares outstanding)

For 2020, it is

= ($124 - $23) ÷ (200 millions)

= $0.51 per share

And for 2021, it is

= ($207- $32) ÷ (300 millions)

= $0.58 per share

We simply applied the above formula