Chan Inc. has a profit of $1,000,000 for 2013, and there are 400,000 common shares issued. Dividends declared and paid during the year amounted to $200,000 on the preferred shares and $300,000 on the common shares. The earnings per share for 2013 is
A) $2.50.
B) $0.75.
C) $2.00.
D) $1.25.

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated as (Net Income - Preferred Dividends) / Average Outstanding Common Shares. Here, EPS = ($1,000,000 - $200,000) / 400,000 = $2.00.

Chan Inc Has a Profit of $1,000,000 for 2013, and There