On December 31, 2017, Albrecht Corporation had outstanding 393,000 shares of common stock and 12,000 shares of 9.5%, $100 par value cumulative, nonconvertible preferred stock. On May 31, 2018, Albrecht sold for cash 12,000 shares of its common stock. No cash dividends were declared for 2018. For the year ended December 31, 2018, Albrecht reported a net loss of $2,086,000.
Calculate Albrecht's net loss per share for the year ended December 31, 2018.
Loss per share
Just like earnings per share shows per share profitability for common stockholders, loss per share shows per share loss to be borne by the common stockholders. It shows the limited liability concept of companies where the liabilities of owners ( common stockholders) is limited to the number of shares held by them.
Answer and Explanation:
Net loss per share is calculated just like the earnings per share is calculated however no provision for dividend is made since the company has incurred loss. So the equation is given by
Loss per share(LPS) = net loss/ wieghted average no of shares (WANS)
WANS= time weighted average of shares = 393000 * 12/12 + 12000 * 7/12 =400000
LPS= $2086000/400000 =$ 5.215 per share
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from Financial Accounting: Homework Help ResourceChapter 1 / Lesson 23