Doonan Corporation has provided the following financial data from its balance sheet and income statement: The market price of common stock at the end of Year 2 was $4.79 per share. The company's earnings per share for Year 2 is closest to:
A)$6.33 per share
B)$0.29 per share
C)$0.45 per share
D)$0.62 per share

Question

Doonan Corporation has provided the following financial data from its balance sheet and income statement:  The market price of common stock at the end of Year 2 was $4.79 per share. The company's earnings per share for Year 2 is closest to:
A)$6.33 per share 
B)$0.29 per share 
C)$0.45 per share 
D)$0.62 per share

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated as net income divided by total shares outstanding:
EPS = Net Income / Shares Outstanding

From the income statement, we can see that the net income for Year 2 is $2,030,000. From the balance sheet, we can see that the total shares outstanding at the end of Year 2 is 7,000,000.

EPS = $2,030,000 / 7,000,000 = $0.29 per share

Therefore, the closest answer choice is B) $0.29 per share.

Doonan Corporation Has Provided the Following Financial Data from Its