Net income $160,000 Preferred dividends $10,000 Shares of common stock outstanding 20,000 Market price per share of common stock $35 The company's earnings per share on common stock is:

Question

Business

Dayami Lutz

6 November, 08:03

Net income $160,000 Preferred dividends $10,000 Shares of common stock outstanding 20,000 Market price per share of common stock $35 The company's earnings per share on common stock is:

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Answers (1)

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Ismael Novak · Answer 1

The company's earnings per share on common stock is $7.50

Explanation:

Given data

Net income N = $160,000

Preferred dividends D = $10,000

common stock outstanding C = 20,000

Market price P = $35 / share

to find out

earnings per share on common stock is

solution

we will find earning per share that is given by

Earnings per share = (net income - preferred dividend) / common stock outstanding

so now put all these value in this equation we get

Earnings per share = (160,000 - 10,000) / 20,000

Earnings per share = (150,000) / 20,000

Earnings per share = 7.5

so The company's earnings per share on common stock is $7.50