Homework SourseMetlock Inc presented the following data Compute earnings pe
Metlock Inc. presented the following data.
Compute earnings per share.
| Net income | $2,470,000 | |
| Preferred stock: 52,000 shares outstanding, $100 par, 8% cumulative, not convertible | 5,200,000 | |
| Common stock: Shares outstanding 1/1 | 736,800 | |
| Issued for cash, 5/1 | 315,600 | |
| Acquired treasury stock for cash, 8/1 | 134,400 | |
| 2-for-1 stock split, 10/1 |
Solution
Earnings Per Share = Net Income available to common shareholders / Weighted average common shares outstanding
Net Income available to common shareholders
Net Income available to common shareholders = Net Income – Preferred Dividend
= $24,70,000 – [$52,00,000 x 8%]
= $24,70,000 – 416,000
= $20,54,000
Weighted average common shares outstanding
Weighted average common shares outstanding = [736,800 x 4/12 x 2] + [10,52,400 x 3/12 x 2] + [918,000 x 5/12 x 2]
= 4,91,200 + 5,26,200 + 7,65,000
= 17,82,400 Shares
Therefore, Earnings Per Share0
= $20,54,000 / 17,82,400 Shares
= $1.15 per share
