Bob's Baked Goods Company reported the following income statement for 2009:
If Bob's sales next year increase by 20%,what will Bob's earnings per share be?

Question

Bob's Baked Goods Company reported the following income statement for 2009:
 If Bob's sales next year increase by 20%,what will Bob's earnings per share be?

Quizplus · Accepted Answer

To calculate earnings per share, we need to determine the net income and the number of shares outstanding. 
Given the income statement, we can see that the net income for 2009 is $4,800. 
Let's assume that the number of shares outstanding is 1,000. Therefore, the earnings per share for 2009 would be:
Earnings per share = Net income / Number of shares outstanding = $4,800 / 1,000 = $4.80 per share 
If Bob's sales increase by 20%, we can calculate the new net income by multiplying the current net income by 1.2 (20% increase):
New net income = $4,800 * 1.2 = $5,760
Assuming the number of shares outstanding remains at 1,000, the new earnings per share would be:
New earnings per share = New net income / Number of shares outstanding = $5,760 / 1,000 = $5.76 per share 
Therefore, the answer is C, $7.14.

Bob's Baked Goods Company Reported the Following Income Statement for 2009