In 2010 Dowor Ltd.earned gross revenues of $2,500,000 and had net income of $480,000.During 2010 the company had 200,000 common shares outstanding and its average shareholders equity was $1,000,000.Dowor's basic earnings per share for 2010 is:

Question

Quizplus · Accepted Answer

Basic earnings per share (EPS) = Net Income / Weighted average number of common shares outstanding. 
Weighted average number of common shares outstanding = total number of shares x portion of the year shares were outstanding. 
In this case, there were 200,000 common shares outstanding for the entire year, so the weighted average number of common shares outstanding is 200,000. 
Therefore, the basic EPS is $480,000 / 200,000 = $2.40 per share.