Calculate earnings per share

bilby_jonathan · #1 Jun 3, 2007, 10:27 PM

Quark company earned $90,000 in income and paid cash dividends of $10,000 to preferred shareholders during the current year. Quark had 12,500 weighted-average shares of common stock outstanding for the year.

Calculate the company's earnings per share.

omsailogistic · Jun 4, 2007, 03:32 AM

Concept: The common stock holders are entitled to receive share in profits ( in the form of dividend) only after all obligations ( interest, pref dividend etc ) have been paid.

Therefore amount available for common stockholders = $90000 - $ 10000
= $80000
Outstanding Stock = 12500

EPS = $80000 / 12500
EPS = 6.4 PER SHARE

Hope you find the answer :-)



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