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Neue Inc reports net income of $500,000; during the year, the company declared $100,000 in preferred stock dividends and had an average of 250,000 shares of common stock outstanding. Earning per share rounded to the nearest cent will be:

Respuesta :

Answer:

1.60

Explanation:

($500,000 - $100,000)/250,000

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If  the average of 250,000 shares of common stock outstanding the earning per share is $1.60.

Using this formula

Earnings per share (EPS) =Net income -Preferred stock dividend )/Average shares of common stock outstanding

Where:

Net income=$500,000

Preferred stock dividend=$100,000

Average shares of common stock outstanding=250,000

Let plug in the formula

Earnings per share (EPS) =($500,000-$100,000)/$250,000

Earnings per share (EPS) =$400,000/$250,000

Earnings per share (EPS) =$1.60

Inconclusion the average of 250,000 shares of common stock outstanding the earning per share is $1.60.

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