Kevin is the CFO of Nana Inc. Kevin said the firm earned $13 million last year and maintains a 20% dividend payout ratio. The company has 2 million shares of common stock outstanding and a P/E ratio of 12. What amount of earnings per share did Nana Inc. generate?

A. $2.60

B. $5.30

C. $6.50

D. $7.80

Question

Business

Tamia Estrada

12 January, 05:54

Kevin is the CFO of Nana Inc. Kevin said the firm earned $13 million last year and maintains a 20% dividend payout ratio. The company has 2 million shares of common stock outstanding and a P/E ratio of 12. What amount of earnings per share did Nana Inc. generate?

A. $2.60

B. $5.30

C. $6.50

D. $7.80

+3

Answers (1)

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Giancarlo Branch · Answer 1

Earnings per share = $6.5

Explanation:

Earning per share (EPS) is calculated as the the value of earning available to shareholders divided by the number of shares outstanding. Earnings available to ordinary shareholders is the residual earnings after all other priority claims of other investors have been settled.

Earnings per share (EPS)

= Total earnings available to ordinary shareholders / Number of shares outstanding

= $13,000,000/2,000,000 units

=$6.5

The amount of earnings per share generated by Nana Inc. = $6.5

Kevin is the CFO of Nana Inc. Kevin said the firm earned $13 million last year and maintains a 20% dividend payout ratio. The company has 2 million shares of common stock outstanding and a P/E ratio of 12. What amount of earnings per share did Nana Inc. generate?A. $2.60B. $5.30C. $6.50D. $7.80