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

Exercise 56

Calculate EPS reported before stock split and stock dividend During the fiscal year ended September 30, 2011, Worrell, Inc., had a 2-for-1 stock split and a 5% stock dividend. In its annual report for 2011, the company reported earnings per share for the year ended September 30, 2010, on a restated basis, of $0.60.

Required :

Calculate the originally reported earnings per share for the year ended September 30, 2010.

Step 1 of 3

Compute EPS reported prior to stock dividend and 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.