Question

Assume the net profit for manufacturer of mountain bikes was $1,000,000 last year. The firm paid out $40,000 in dividends and has 200,000 shares of common stock outstanding. Its earnings per share (EPS) was:

Answer 1

Based on the net profit, the dividends paid and the common stock outstanding, the Earnings per share was $5 per share.

What is the Earnings per share?

This can be found by the formula:

= Net profit / Number of outstanding shares

Solving gives:

= 1,000,000 / 200,000

= $5 per share

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