Snow International, a ski company in Canada, has 500 shares of outstanding common stock and has not issued any preferred stock. Net income is $27,500. What would be the earnings per share calculation?

Question

Quizplus · Accepted Answer

The earnings per share can be calculated by dividing the net income by the number of outstanding common shares. In this case, the calculation would be $27,500/500 = $55. Choice A is incorrect because it subtracts the number of outstanding shares from the net income, which is not relevant to calculating earnings per share. Choice B is incorrect because it multiplies the net income by the number of outstanding shares, which also does not give the earnings per share. Choice C is incorrect because it divides the number of outstanding shares by the net income, which is the inverse calculation of earnings per share.

Snow International, a Ski Company in Canada, Has 500 Shares