Question

The Handy Dandy Corporation has an income statement that indicates that Operating Income is $2,375,486 and Net Profit is $1,375,486. It currently has 2 million shares of common stock outstanding and 1 million shares of preferred stock that pays a dividend of $1.00 per share. What is this corporation's approximate Earnings per Share?

Answer 1

Answer:

$0.19 per share

Explanation:

The computation of the approximate Earnings per share is shown below:

Earning per share = (Net profit - preference dividend) ÷ (Number of common stock shares outstanding)

where,

Net profit = $1,375,486

Preference dividend = 1 million shares × $1 = $1 million

And, the number of common stock shares outstanding is 2 million shares

So, the earning per share is

= ($1,375,486 - $1,000,000) ÷  (2,000,000 million shares)

= $0.19 per share