Question

Alpha Company has sales revenue of $5,000,000, cost of goods sold of $2,000,000, and net income of $750,000. For the last three years, the company has 1,000,000 shares of common stock authorized and 200,000 shares of common stock issued and outstanding. The company does not have any preferred stock. What is basic EPS for Alpha Company

Answer 1

The basic EPS for Alpha Company is $3.75 per share

Step-by-step explanation:

The earnings per share are the net income for the year divided by the weighted average number of common stock issued and outstanding.

Net income here belongs to only common stockholders since the company has no debt finance nor preferred stock.

the net income is $750,000

The weighted average number of common stock issued and outstanding is 200,000

earnings per share=$750,000/200,000=$3.75 per share