Blue Company reported: $$\begin{array} { l l }
\text { Share price } & \$ 18 \
\text { Net profit } & \$ 3,000 \
\text { Preference dividend } & \$ 500 \
\text { Ordinary dividend } & \$ 1,000 \
\text { Issued ordinary shares } & 1,000 \text { shares }
\end{array}$$ Earnings per ordinary share is:
A)$2.50.
B)$3.00.
C)$1.80.
D)$1.50.

Question

Blue Company reported: $$\begin{array} { l l } 
\text { Share price } & \$ 18 \
\text { Net profit } & \$ 3,000 \
\text { Preference dividend } & \$ 500 \
\text { Ordinary dividend } & \$ 1,000 \
\text { Issued ordinary shares } & 1,000 \text { shares }
\end{array}$$ Earnings per ordinary share is:
A)$2.50.
B)$3.00.
C)$1.80.
D)$1.50.

Quizplus · Accepted Answer

Earnings per ordinary share (EPS) is calculated by subtracting preference dividends from net profit and then dividing by the number of issued ordinary shares. Here, EPS = ($3,000 - $500) / 1,000 shares = $2.50.

Blue Company Reported Earnings Per Ordinary Share Is: A)$2

Blue Company Reported Earnings Per Ordinary Share Is:
A)$2