Earnings per Share:

Earnings per share shows the how much does the stocks of the company earns. This is the portion of the earnings allocated for the company's outstanding shared. It is computed by dividing the net income over the average number of outstanding shares.

 Common Stock-January 1 50,000 Par Value 5 Outstanding Common Shares-January 1 10,000 Issuance-July 1 10,000 Total outstanding Common Shares 20,000

{eq}\begin{align*} Earnings~per~Share&=\frac{Net~Income}{Common~Shares~Outstanding}\\ &=\frac{140,500}{20,000}\\ &=7.025 \end{align*} {/eq}

How to Calculate Earnings Per Share: Definition & Formula

from Introduction to Business: Homework Help Resource

Chapter 24 / Lesson 14
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