Montreal Electronics has the following data available: $\begin{array} { l l l }
&&&&&& 2013 & 2012 \
\text { Net Income } &&&&&& \$ 90 & \$ 80 \
\text { preferred Dividends Per Share } &&&&&&\$ 0 & \$ 0
\end{array}$
$\text{Weighted Average Number of Common}$
$\begin{array}{cll}
\text { Shares Outstanding During Year } & 200 & 200 \
\text { Annual Common Dividends Per Share } & \$ .40 & \$ .20 \
\text { Closing Market Price Common Stock, } 12 / 31 & \$ 9.00 & \$ 6.00
\end{array}$ What are the earnings per share for Montreal Electronics in 2013? Has the earnings per share improved or not improved since 2012?
A)$.40,improved
B)$.40,not improved
C)$.40,unknown
D)$.45,not improved
E)$.45,improved

Question

Montreal Electronics has the following data available: $\begin{array} { l l l } 
&&&&&& 2013 & 2012 \
\text { Net Income } &&&&&& \$ 90 & \$ 80 \
\text { preferred Dividends Per Share } &&&&&&\$ 0 & \$ 0
\end{array}$ 
$\text{Weighted Average Number of Common}$
$\begin{array}{cll}
\text { Shares Outstanding During Year } & 200 & 200 \
\text { Annual Common Dividends Per Share } & \$ .40 & \$ .20 \
\text { Closing Market Price Common Stock, } 12 / 31 & \$ 9.00 & \$ 6.00
\end{array}$ What are the earnings per share for Montreal Electronics in 2013? Has the earnings per share improved or not improved since 2012?
A)$.40,improved
B)$.40,not improved
C)$.40,unknown
D)$.45,not improved
E)$.45,improved

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated as follows:

EPS = (Net Income - Preferred Dividends) / Weighted Average Number of Common Shares Outstanding

In this case, net income for 2013 was $90, and there were no preferred dividends, so:

EPS = ($90 - $0) / 200 = $0.45

For 2012, the EPS was:

EPS = ($80 - $0) / 200 = $0.40

Therefore, the EPS has improved from $0.40 in 2012 to $0.45 in 2013, so the answer is E: $.45, improved.

Montreal Electronics Has the Following Data Available Weighted Average Number of Common\text{Weighted Average Number of Common}Weighted Average Number of Common

Montreal Electronics Has the Following Data Available $\text{Weighted Average Number of Common}$