Question

Financial statement data for the years 20Y5 and 20Y6 for Black Bull Inc. follow: 20Y5 20Y6 Net income $1,538,000 $2,485,700 Preferred dividends $50,000 $50,000 Average number of common shares outstanding 80,000 shares 115,000 shares a. Determine the earnings per share for 20Y5 and 20Y6. Round to two decimal places. 20Y5 20Y6 Earnings per Share $fill in the blank 1 $fill in the blank 2 b. Is the change in the earnings per share from 20Y5 to

Answer 1

Answer:

1. Earnings per share = (Net income - Preferred Dividend) / Average Common Stock EPS

Earnings per share 20Y5 = (1538000 - 50000) / 80000

Earnings per share 20Y5 = $18.60

Earnings per share 20Y6 = (2485700 - 50000) / 115000

Earnings per share 20Y6 = $21.18

2. The charnge in EPS is Favourable because there is increase in Earnings per share over the year.