A company reports the following: $$\begin{array} { l r }
\text { Net income } & \$ 160,000 \
\text { Preferred dividends } & \$ 10,000 \
\text { Shares of common stock outstanding } & 20,000 \
\text { Market price per share of common stock } & \$ 35
\end{array}$$
The company's earnings per share on common stock is
A) $13.33
B) $8.50
C) $7.50
D) $35.00

Question

A company reports the following: $$\begin{array} { l r } 
\text { Net income } & \$ 160,000 \
\text { Preferred dividends } & \$ 10,000 \
\text { Shares of common stock outstanding } & 20,000 \
\text { Market price per share of common stock } & \$ 35
\end{array}$$ 
 The company's earnings per share on common stock is
A) $13.33
B) $8.50
C) $7.50
D) $35.00

Quizplus · Accepted Answer

Earnings per share (EPS) on common stock is calculated by subtracting preferred dividends from net income and then dividing by the number of shares of common stock outstanding. Thus, EPS = ($160,000 - $10,000) / 20,000 = $150,000 / 20,000 = $7.50.

A Company Reports the Following The Company's Earnings Per Share on Common Stock Is A)

A Company Reports the Following The Company's Earnings Per Share on Common Stock Is
A)