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    sagnik2422's Avatar
    sagnik2422 Posts: 77, Reputation: 1
    Junior Member
    		  
    #1

    Apr 20, 2014, 09:25 PM
    Calculate EPS need help Financial Accounting
    At December 31, 2012 and 2013, Funk & Noble Corporation had outstanding 820 million shares of common stock and 2 million shares of 8%, $100 par value cumulative preferred stock. No dividends were declared on either the preferred or common stock in 2012 or 2013. Net income for 2013 was $426 million. The income tax rate is 40%. Calculate earnings per share for the year ended December 31, 2013.


    My confusion : The solution showed 426 (NI) - $16 (pref. dividends) / 820 mil common shares = $.50


    They explained the $16 as 8% x 200 mil = 16 mil but I don't get where the $200 mil comes from.


    Can someone please explain this with steps?


    Thanks
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #2

    Apr 21, 2014, 01:24 AM
    200 ml = 2 million shares x $100 par value
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