Earnings Per Share

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Earnings Per Share Questions and Answers

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In order to compute common earnings per share, preferred dividends are first subtracted from income from continuing operations, and from income before extraordinary items, and from net income; then...
Blackwood Company has provided the following information: Number of issued common shares: 900,000 Net income: $1,000,000 Number of authorized common shares: 1,000,000 Number of outstanding common s...
Savings per share represents the: a. gross revenues of a firm divided by the number of outstanding shares of stock. b. net cash flow available per share of outstanding stock. c. amount of net incom...
On December 31, 2017, Berclair Inc. had 420 million shares of common stock and 6 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair p...
Alpha Corporation has one class of common stock with a par value of $5. There is not treasury stock balance as of January 1, 2017. On January 1, 2017, Alpha had a $75,000 balance on its Common Stoc...
How can a company increase earnings per share without realizing an increase in net income?
When and who utilizes the earnings per share disclosure?
On December 31, 2015, Dow Steel Corporation had 780,000 shares of common stock and 48,000 shares of 10%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 5% common...
The Houston Corp. needs to raise money for an addition to its plant. It will issue 300,000 shares of new common stock. The new shares will be priced at $60 per share with an 8.5% spread on the offe...
For how many periods must a company present EPS data?
Rockland Corporation earned net income of $300,000 in 2010 and had 100,000 shares of common stock outstanding throughout the year. Also outstanding all year was $800,000 of 10% bonds, which are con...
The Alford Group had 290,000 shares of common stock outstanding at January 1, 2016. The following activities affected common shares during the year. There are no potential common shares outstanding...
Fantic Fast Foods had earnings after taxes of $390,000 in the year 2009 with 300,000 shares outstanding. On January 1, 2010, the firm issued 25,000 new shares. Because of the proceeds from these n...
Zybeck Corp. projects operating income of $4 million next year. The firm's income tax rate is 40%. Zybeck presently has 750,000 shares of common stock which have a market value of $10 per share, no...
Online Network, Inc., has had net income of $600,000 in the current fiscal year. There are 100,000 shares of common stock outstanding along with convertible bonds, which have a total face value of...
Kevin's Bacon Company Inc. has earnings of $9 million with 2,500,000 shares outstanding before a public distribution. Seven hundred thousand shares will be included in the sale, of which 500,000 ar...
Harrison Company, Inc. began operations on January 1,2017, and applied the LIFO method for inven
Buffalo Corp. has 150,620 shares of common stock outstanding. In 2017, the company reports income from continuing operations before income tax of $1,221,000. Additional transactions not considered...
During the year ended December 31, 2017, Gluco, Inc., split its stock on a 3-for-1 basis. In its annual report for 2016, the firm reported net income of $923,500 for 2016, with an average 249,900 s...
Kingbird Inc. presented the following data: Net income $2,340,000 Preferred stock: 53,000 shares outstanding, $100 par, 8% cumulative, not convertible 5,300,000 Common stock: Shares outstanding...
The information below pertains to Barkley Company for 2015. Net income for the year $1,217,000 9% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 40 shares of com...
Assume that the following data relative to Kane Company for 2015 is available: Net Income $2,730,000. Transactions in Common Shares Change. Cumulative Jan. 1, 2015, Beginning number 680,000.
The stockholders' equity section of Culver Corporation appears below as of December 31, 2017. Net income for 2017 reflects a total effective tax rate of 34%. Included in the net income figure is a...
The following information pertains to Parsons Co.: Preferred stock, cumulative: Par value per share $100 ; Dividend rate 8% ; Shares outstanding 10,000 ; Dividends in arrears none ; Common stock: P...
Three different plans for financing a $6,200,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount,...
Three different plans for financing a $8,200,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount,...
Three different plans for financing a $3,200,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount,...
As of January 1, 2015, Anvil Corporation had 25,000 shares of $10 par common stock outstanding. The company had issued stock options in 2013 to its management personnel, permitting them to acquire...
River Cruises is all equity financed. Suppose it now issues $250,000 of debt at an interest rate of 10% and uses the proceeds to repurchase 25,000 shares. Assume that the firm pays no taxes and tha...
Haskell Corp. is comparing two different capital structures. Plan I would result in 16,000 shares of stock and $100,000 in debt. Plan II would result in 12,000 shares of stock and $200,000 in debt....
Show your work. Pina Corporation earned net income of $342,700 in 2017 and had 107,000 shares of common stock outstanding throughout the year. Also outstanding all year was $720,000 of 9% bonds, wh...
Which of the following is true of an S corporation? a. The corporation has two classes of stock: common stock and preferred stock. b. Any person from anywhere in the world can become a shareholder...
On January 1, 2013, Jeans-R-Us Company awarded 15 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. One the date of the gra...
How can EPS increase if Net Income and Weighted-average common shares outstanding decrease?
For 2014, LBJ Corporation reported net income of $37,500; net sales $562,500; and weighted average shares outstanding of 7,500. There were no preferred dividends. What was the 2014 earnings per sha...
The stockholder's equity section of Splish Corporation appears below as of December 31, 2017. TABLE.
The following information (in millions of dollars) is available for Limited Brands for a recent year: sales revenue $9,043, net income $220, preferred dividend $0, and weighted-average shares outst...
Suppose the following information is available for Callaway Golf Company for the years 2017 and 2016. 2017 2016 Net sales $ 1,119,000 $ 1,125,400 Net income (loss) 64,800 54,600 Total assets 855,3...
Gilliland Airlines is considering two alternatives for the financing of a purchase of a fleet of airplanes. These two alternatives are: 1. Issue 87,000 shares of common stock at $30 per share. (Ca...
Assume the following. Net assets (assets minus liabilities) at the beginning of the year were $150,000 and at the end of the year they were $750,000; common stock increased (some were issued) durin...
Howat Corporation earned $360,000 during a period when it had an average of 100,000 shares of common stock outstanding. The common stock sold at an average market price of $15 per share during the...
Ziegler Corporation reports net income of $270,000 and a weighted-average of 180,000 shares of common stock outstanding for the year. Assume that Ziegler has cumulative preferred stock dividends fo...
Earnings per share means earnings per share of _____.
Earning Per Share = Net Income - Preferred Dividends / The Weighted Average Common Shares Outstanding True False
In determining diluted EPS, convertible preferred stock is always dilutive. True False Explain.
For 2014, CAP Corporation reported net income of $96,000; net sales $1,440,000; and weighted average shares outstanding of 9,600. There were no preferred dividends. What was the 2014 earnings per s...
What are the links between earnings per share and common price per share? How do you use investors' earnings per share or price to earnings per share to evaluate the stock price?
Three different plans for financing a $5,000,000 corporation are under consideration by its organizers. Uner each of the following plans, the securities will be issued at their par of face amount,...
If share repurchases increase EPS more than dividends, do share repurchases also create more value than dividends?
The balance sheet of the Delta Corporation shows a capital structure as follows: Current liabilities $ 0 Bonds (6% interest) 100,000 Common stock 900,000 Total claims $1,000,000 Its rate of return...
A firm with earnings before interest and taxes of $500,000 needs $1 million of additional funds. If it issues debt, the bonds will mature after 20 years and have a coupon of 10%. The firm could iss...
A firm has a market value equal to its book value. Currently, the firm has excess cash of $300 and other assets of $6200. Equity is worth $5000. The firm has 500 shares of stock outstanding and net...
On December 31, 2017, Berclair Inc. had 600 million shares of common stock and 17 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair...
Walker Walker Machine Tools has 6.8 million shares of common stock outstanding. The current market price of Walker common stock is $78 per share rights-on. The company's net income this year is $24...
The stockholders' equity section on the balance sheet of Dillard's, a popular department store, is shown below. The company reported a net loss of s 241,065,000 and declared and paid dividends of $...
Sterling Optical and Royal Optical both make glass frames and each is able to generate earnings before interest and taxes of $144,000. The separate capital structures for Sterling and Royal are sho...
2014 Net Income $3,000,000 Year-end shares of common stock 1,000,000 shares Weighted-average shares of common stock 800,000 shares $100 par value, 12% cumulative preferred stock 10,000 shares $1,00...
Venzuela Company's net income for 2014 is $48,400. The only potentially dilutive securities outstanding were 1,100 options issued during 2013, each exercisable for one share at $8. None has been ex...
Niles Company granted 42 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $14 per sh...
Mihok Corporation has provided the following financial data: Year 2 ; Year 1 ; Stockholders' equity: Common stock, $3 par value ; $300,000 ; $300,000 ; Additional paid-in capital-common stock ; 10...
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