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FinancialAccoun
Aug 10, 2008, 01:37 AM
Captain Forest can you explain this question please

Alberta Ltd. Is a public company trading on the Toronto Stock Exchange. The company's shares are currently trading for $16.00 per share. Alberta just released the following information related to its 2007 year end:



2007
2006

Total assets
$14,500,000

13,250,000

Total liabilities
7,500,000

6,750,000

Net income
762,500

555,000

Preferred share dividends
65,000

65,000

Average number of common shares outstanding
100,000

100,000




Reference: Ref 11-4



For 2007, the company had earnings per share of:


$7.63


$6.98


$6.50


Cannot be calculated with the information provided

The answer is 6.98
Thanks

CaptainForest
Aug 14, 2008, 01:39 AM
2007 EPS:
Net Income 762,500 – Preferred Dividends 65,000 = 697,500 (which is available to common shareholders). Divide that by how many shares you have which is 100,000, and you have how much money each share earned in 2007.

Therefore, 697,500 / 100,000 = 6.975 = 6.98