Stockholders' equity common $360,000 Total stockholders' equity 800,000 Sales revenue 400,000 Net...

Question:

Stockholders' equity common $360,000

Total stockholders' equity 800,000

Sales revenue 400,000

Net income 76,000

Number of shares of common stock 40,000

Common stock dividends 24,000

Preferred stock dividends 4,000

What is the earnings per share for Carolina?

Earnings Per Share:

Earnings per share indicate the return generated by investing the capital raised from each issued share. It is computed by dividing the net income available to equity shareholders (Net income less preferred dividends) with the weighted average shares of common stock outstanding. Higher earnings per share indicate a better investment of the share capital raised.

Answer and Explanation:


Answer:

The earnings per share for Carolina are $1.80 per share.

Explanation:

As per the data shared by Carolina:

  • Net income = $76,000
  • Number of shares of common stock = 40,000 shares
  • Preferred stock dividends = $4,000

Computation:

  • Earnings per share = (Net income - Preferred dividend) / Number of shares of common stock
  • Earnings per share = ($76,000 - $4,000) / 40,000 shares
  • Earnings per share = $1.80 per share

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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