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For 2014, EAB Corporation reported net income of $78,750; net sales of $1,378,125; and weighted...

Question:

For 2014, EAB Corporation reported net income of $78,750; net sales of $1,378,125; and weighted average shares outstanding of 10,500. There were no preferred dividends. What were the 2014 earnings per share?

Earnings Per Share:

The ratio of the net income available for common shareholders relative to the weighted average common shares outstanding is referred to as the earnings per share. To compute the earnings per share we need to determine the net income available for common shareholders which is derived by reducing the preferred dividend from the net income.

Answer and Explanation:


Answer:

EAB Corporation's earnings per share for 2014 were $7.50.

Explanation:

As per EAB Corporation's data for 2014:

  • Net income = $78,750
  • Preferred dividends = $0
  • Weighted average shares outstanding = 10,500 shares

Computation:

  • Earnings per share = (Net income - Preferred dividend) / Weighted average common shares outstanding
  • Earnings per share = ($78,750 - $0) / 10,500 shares
  • Earnings per share = $7.50

Learn more about this topic:

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How to Calculate Earnings Per Share: Definition & Formula

from Introduction to Business: Homework Help Resource

Chapter 24 / Lesson 14
111K

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