A corporation has net income of $200,000 for the current year. The corporation has 5,000 shares of cumulative, 5%, $100 preferred stock and 20,000 shares of $20 par common stock outstanding for all of the year. What is the denominator to be used in the earnings per share calculation?

Question

Quizplus · Accepted Answer

The denominator in the earnings per share (EPS) calculation is the number of shares of common stock outstanding, which is 20,000 shares in this case. Preferred shares are not included in the EPS calculation for common stock.

A Corporation Has Net Income of $200,000 for the Current