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 350,000 shares. Compute its basic earnings per share.

Answer 1

EPS = 2.2

Step-by-step explanation:

Earning per share is the amount due to each of the ordinary shareholders after settlement of interest due on loans , preferred dividends and tax.

Earnings per share (EPS) = Earnings attributable to ordinary shareholders ÷ Units of shares

Where ;

Earnings attributable to ordinary shareholders = Net income - Preferred dividends

EPS = $770,000 - 0 ÷ 350,000 shares

EPS = $2.2