Swifty Corporation had 604000 shares of common stock outstanding on January 1, issued 910000...

Question:

Swifty Corporation had 604000 shares of common stock outstanding on January 1, issued 910000 shares on July 1, and had income applicable to common stock of $2931000 for the year ending December 31, 2018. Earnings per share of common stock for 2018 would be (rounded to the nearest penny):

a. $2.77.

b. $3.23.

c. $4.85.

d. $2.29.

Earnings Per Share:

Earnings-per-share is a financial ratio used to measure how the investment of stockholders is paying up in terms of earnings each year. It is mandatory to report basic EPS and diluted EPS below the income statement.

Answer and Explanation:


The correct answer to this question is a. $2.77


Earnings per share:


Earnings per share = net income available to stockholders / weighted average outstanding shares

Net income available to common stockholders = $2,931,000

Weighted average outstanding shares = (604,000 * 12/12 ) + (910,000 * 6/12) = 604,000 + 455,000 = 1,059,000 shares

Earnings per share = $2,931,000 / 1,059,000 shares = $2.77 per share


Learn more about this topic:

Loading...
How to Calculate Earnings Per Share: Definition & Formula

from Introduction to Business: Homework Help Resource

Chapter 24 / Lesson 14
111K

Related to this Question

Explore our homework questions and answers library