Question

Green Thumb Nursery has 38,000 shares outstanding at a market price of $63.27 per share. The earnings per share are $3.27. The firm has total assets of $332,000 and total liabilities of $192,000. Today, the firm announced a share repurchase for $87,000 of its stock. What is the earnings per share after the repurchase

Answer 1

Based on the market price and the earnings per share before the share repurchase, the earnings per share after is $3.39.

How can the earnings per share be found?

First find the earnings of the company:

= 38,000 x 3.27

= $124,260

Then find the shares to be repurchased;

= 87,000 / 63.27

= 1,375shares

The shares after repurchase is:

= 38,000 - 1,375

= 36,625 shares

The new earnings per share is:

= 124,260 / 36,625

= $3.39

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