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Earnings per share

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XYZ, Inc. ended 2007 with a net profit before taxes of $300,000. The company is subject to a 40% tax rate and must pay $40,000 in preferred stock dividends before distributing any earnings on the 90,000 shares of common stock currently
outstanding. XYZ, Inc. had earnings per share in 2007 of:
a. $3.33
b. $1.56
c. $2.00
d. None of the above

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Solution Summary

The solution calculates Earnings per share given net profit, tax rate, preferred stock dividends , number of outstanding shares of common stock

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XYZ, Inc. ended 2007 with a net profit before taxes of $300,000. The company is subject to a 40% tax rate and must pay $40,000 in preferred stock dividends before ...

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