Doonan Corporation has provided the following financial data from its balance sheet and income statement: The market price of common stock at the end of Year 2 was $4.79 per share. The company's earnings per share for Year 2 is closest to:
A) $6.33 per share
B) $0.29 per share
C) $0.45 per share
D) $0.62 per share

Question

Doonan Corporation has provided the following financial data from its balance sheet and income statement:  The market price of common stock at the end of Year 2 was $4.79 per share. The company's earnings per share for Year 2 is closest to:
A) $6.33 per share 
B) $0.29 per share 
C) $0.45 per share 
D) $0.62 per share

Quizplus · Accepted Answer

To calculate earnings per share (EPS), we need to divide net income by the average number of shares outstanding during the year.

Average number of shares outstanding = 1,538,000 [(given in balance sheet) + 1,510,000 (given in income statement) / 2]

Net income = $439,000 (given in income statement)

EPS = $439,000 / 1,524,000 = $0.2883 or $0.29 per share (rounded to nearest cent)

Therefore, the closest answer is B, $0.29 per share.

Doonan Corporation Has Provided the Following Financial Data from Its