Murray Company reports net income of $770,000 for the year. It has no preferred stock, and its weighted-average common shares outstanding is 350,000 shares. Compute its basic earnings per share.
Murray Company reports net income of $770,000 for the year. It has no preferred stock, and its weighted-average common shares outstanding is 350,000 shares. Compute its basic earnings per share.
EPS = $2.75
Explanation:
The earning per share is the amount attributable to each ordinary share after the settlement of interest due on loan obligations, tax and preferred dividends.
As it implies it is the measure of the return per unit of ordinary share, and the higher the more profitable the investment
It is determined by the formula below:
Earning per share(EPS)
= Earnings attributable to ordinary shareholders/Units of shares
Earnings attributable to ordinary shareholders
=Net income - preferred dividends
EPS = $770,000 - 0/280,000 units
EPS = $2.75
EPS = 2.2
Explanation:
Earning per share is the amount due to each of the ordinary shareholders after settlement of interest due on loans , preferred dividends and tax.
Earnings per share (EPS) = Earnings attributable to ordinary shareholders ÷ Units of shares
Where ;
Earnings attributable to ordinary shareholders = Net income - Preferred dividends
EPS = $770,000 - 0 ÷ 350,000 shares
EPS = $2.2
EPS 2.75
Explanation:
Earnings per share is measure that investors use to track how much they earning per share invested in stock to calculate it we need net income and shares outstanding
Net income $770 000
Weighted average common Shares 280 000
EPS = net income / Weighted average common Shares
=770000/280000
=2.75
Meaning for every 1 dollar invested in a share earns 2.75 dollars