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    challenge mather's Avatar
    challenge mather Posts: 19, Reputation: 1
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    #1

    Apr 1, 2008, 03:50 AM
    Earnigs per share/Outstanding shares
    ElectroWizard Company produces a popular video game called Destructo which sells for $32. Last year ElectroWizard sold 50,000 Destructo games, each of which costs $6 to produce. ElectroWizard incurred selling and administrative expenses of $80,000 and depreciation expense of $10,000. In addition, ElectroWizard has a $100,000 loan outstanding at 12%. Their tax rate is 40%. There are 100,000 common shares outstanding.
    Prepare an income statement for ElectroWizard in good form (include EPS). (





    Dividing Operation Profit by Shares Outstanding produces Earnings Per Share will give me the earnings per share is this is true

    Do I still report outstanding shares even though they are not authorized I know I need to document.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Apr 4, 2008, 03:57 PM
    Dividing Operation Profit by Shares Outstanding produces Earnings Per Share will give me the earnings per share is this is true
    Well, technically "operating income" is not the number you use because it doesn't include interest expense or the taxes. You don't have any type of stuff here that would require dividing down EPS into sections. (You may not even have learned that yet.) So just use net income, which is not the same as operating income.

    Do I still report outstanding shares even though they are not authorized I know I need to document.
    I'm not sure how outstanding shares cannot be authorized. Where are you getting information from about authorized shares? And the authorized shares is irrelevant to doing this. You just want outstanding shares.
    cookie10's Avatar
    cookie10 Posts: 2, Reputation: 1
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    #3

    Oct 24, 2010, 09:12 AM
    Reported shares are 167,000, divided by shares 213,000 and earnings per share I have 0.78 but for some reason it says try again. I don't understand I took 167,000 and divided by 213,000 and came up with this answer per share and the tells me to try again. What am I doing wrong

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