Company X has net income of $532,695, dividends of $156,071, current share price of $14 per share, and 235,046 shares outstanding. What is the earnings per share ($/share)?

If the answer is 10.4567, write 10.46.

Question

Company X has net income of $532,695, dividends of $156,071, current share price of $14 per share, and 235,046 shares outstanding. What is the earnings per share ($/share)?

If the answer is 10.4567, write 10.46.

BlackTom AI · Accepted Answer

Earnings per share (EPS) for common stock is calculated as (Net income − Preferred dividends) / Weighted average common shares outstanding. No preferred dividends or adjustments are stated, so use net income as the numerator and the shares outstanding as the denominator.

Step-by-step calculation:
1. Net income = $532,695.
2. Shares outstanding = 235,046.
3. EPS = 532,695 / 235,046.

Compute the division:
- 235,046 × 2 = 470,092. Subtracting: 532,695 − 470,092 = 62,603 remaining.
- Fractional part = 62,603 / 235,046 ≈ 0.266355.
- Therefore EPS ≈ 2 + 0.266355 = 2.266355.

Rounding to two decimal places (as instructed): 2.266355 rounds to 2.27.

Why this is correct:
- The formula directly uses net income and shares outstanding. Dividends shown ($156,071) are irrelevant for basic EPS unless they are preferred dividends; the problem does not indicate preferred stock, so do not subtract dividends from net income.
- The current share price ($14) is unrelated to EPS; it is used in valuation ratios (e.g., P/E), not in EPS calculation.

Common incorrect approaches and why they are wrong:
- Subtracting total dividends: (532,695 − 156,071) / 235,046 ≈ 1.60 — incorrect unless the $156,071 are preferred dividends (not stated).
- Using share price: 532,695 / 14 ≈ 38,049.64 — this computes income per dollar of price, not per share.
- Computing dividends per share: 156,071 / 235,046 ≈ 0.66 — that yields dividend per share, not EPS.

Conclusion: Using EPS = 532,695 / 235,046 = 2.266355, rounded to two decimals gives 2.27, which matches the provided correct answer.

Company X has net income of $532,695, dividends of $156,071, current share price of $14 per share, and 235,046 shares outstanding. What is the earnings per share ($/share)? If the answer is 10.4567, write 10.46.简答题

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