The Handy Dandy Corporation has an income statement which indicates that Earnings Before Taxes is $2,375,486 and it pays taxes at 35% of earnings.The Corporation currently has 1 million shares of common stock outstanding and does not issue preferred stock.What is this corporation's approximate Earnings per Share?
A)$2.38
B)$1.54
C)$0.42
D)$0.65

Question

Quizplus · Accepted Answer

First, we calculate the net earnings after taxes by multiplying Earnings Before Taxes by (1 - tax rate):

Net Earnings = $2,375,486 x (1 - 0.35) = $1,544,314.90

Then, we divide the net earnings by the number of shares outstanding to get the Earnings per Share:

EPS =Net Earnings / Number of shares outstanding

EPS = $1,544,314.90 / 1,000,000 = $1.54

Therefore, the approximate EPS for this corporation is $1.54, so the best choice is B.

The Handy Dandy Corporation Has an Income Statement Which Indicates