Calculating EPS
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1.Earnings after taxes of $390,000 in the year 2006 with 300,000 shares outstanding.On January 1, 2007, the firm issued 25,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 20 percent.
a. Compute earnings per share for the year 2006.
b. Compute earnings per share for the year 2007.
2. Earnings after taxes of $6000,000 in the year 2006 with 300,000 shares of stock outstanding. On January 1, 2007, the firm issued 40,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 25 percent.
a. Compute earnings per share for the year 2006.
b. Compute earnings per share for the year 2007.
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Solution Summary
There are two problems. Solutions to these problems describe the steps to calculate Earning per share (EPS) under different conditions.
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Please refer attached file for better understanding of formulas.
Solution:
1.
a. Compute earnings per share for the year 2006.
Earning after taxes=$390,000
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Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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