# How to Calculate Earnings Per Share (EPS)

I know the formula is net income minus preferred Dividends / Weighted-Average of Common Shares Outstanding, but how do you get that from this information. Can some one please expalin it to me?

A Corporation has outstanding at December 31, 2008, 50,000 shares of $20 par value, cumulative, 8% preferred stock and 200,000 shares of $5 par value common stock. All shares were outstanding the entire year. During 2008, they earned total revenues of $2,000,000 and incurred total expenses (except income taxes) of $1,200,000. Income tax rate is 30%.

Instructions

Compute the 2008 earnings per share. (Round answer to 2 decimal places.)

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#### Solution Preview

For your convenience, I have attached a formatted MS Excel spreadsheet containing the information below. Feel free to contact me in the future in the event that additional assistance is required.

A Corporation has outstanding at December 31, 2008, 50,000 shares of $20 par value, cumulative,

8% preferred stock and 200,000 shares of $5 par value common stock. All shares were outstanding ...

#### Solution Summary

This file contains a formatted MS Excel spreadsheet which thoroughly illustrates how to calculate earnings per share (EPS).