Home › ACCA › Financial Accounting › Ratio Analysis › Net income is $248,000 and preferred dividends a…
Net income is $248,000 and preferred dividends are $12,000. Common stock of $83,000 has a $10 par value. What is the earnings per share on common stock?
A$28.43
B$29.88
C$26.51
D$2.84
Answer & Solution
Correct answer: A. $28.43
1. Shares outstanding = common stock / par = $83,000 / $10 = 8,300 shares.
2. EPS = (net income − preferred dividends) / shares = ($248,000 − $12,000) / 8,300.
3. = $236,000 / 8,300 = $28.43.
4. Trap: $29.88 (option B) skips subtracting preferred dividends, using $248,000 / 8,300.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.3.4 "Earnings Per Share on Common Stock", p.308_
Related questions
A DuPont analysis breaks the return on equity into which three components?The market price per share is $70.00 and earnings per share is $28.43. What is the price-eDividends per share are $0.96 and the market price per share is $70.00. What is the divideCommon stock dividends are $8,000 and common stock of $83,000 has a $10 par value. What isNet income is $248,000 and sales are $994,000. What is the profit margin (to one decimal)?Gross profit is $580,000 and sales are $994,000. What is the gross profit percentage (to oNet income is $248,000 and preferred dividends are $12,000. Average common stockholders' eNet income is $248,000. Total stockholders' equity was $2,447,000 at the start and $2,675,