Question

In 2017, Esther Corporation reported net income of $600,000. It declared and paid preferred stock dividends of $150,000 and common stock dividends of $60,000. During 2017, Esther had a weighted average of 300,000 common shares outstanding. Compute Esther's 2017 earnings per share. common shares outstanding. Compute Esther's 2017 earnings per share A $1.30 B. $1.50 C. $2.00 D. $2.50

Answer 1

Answer:

B. $1.50

Explanation:

Earning per share is a term to calculate the earning against each outstanding share of the company.  

Earning per share = ( Net income  - Preferred Dividend ) / Number of outstanding shares

Net Income = $600,000

Preferred Stock Dividend = $150,000

Common stock dividend = $60,000

Weighted Average Common outstanding shares = 300,000

Earning per share = ( $600,000  - $150,000 ) / 300,000

Earning per share = $450,000 / 300,000

Earning per share = $1.50