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    FinancialAccoun's Avatar
    FinancialAccoun Posts: 6, Reputation: 1
    New Member
     
    #1

    Aug 10, 2008, 01:37 AM
    Captain forest Ch.11 Shareholder's equity
    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's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    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

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