Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 2

Calculate EPS and dividends per share before stock split For several years Orbon, Inc., has followed a policy of paying a cash dividend of $1.20 per share and having a 10% stock dividend. In the 2011 annual report, Orbon reported restated earnings per share for 2009 of $2.70.

Required:

a.Calculate the originally reported earnings per share for 2009. Round your answer to two decimal places.

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b. Calculate the restated cash dividend per share for 2009 reported in the 2011 annu­al report for comparative purposes. Round your answer to two decimal places.

Step 1 of 4

Compute EPS and dividend per share reported prior to stock split:

Stock dividend:

It is a mode of dividend disbursement made in the terms of additional shares, instead of a cash payout.

Stock split:

It is a corporate act in which existing shares of an organization’s are divided into several shares.

Earnings per share:

It refers to the portion of a firm's profit allocated to each share of outstanding common stock. Basically, it serves as a display of a firm's profitability.