Reed's Birdie Shot, Inc.'s 2010 income statement lists the following income and expenses: EBIT = $555,000, Interest expense = $178,000, and Taxes = $148,000. Reed's has no preferred stock outstanding and 100,000 shares of common stock outstanding. Calculate the 2010 earnings per share.
A) $3.49
B) $2.29
C) $3.14
D) $2.79

Question

Quizplus · Accepted Answer

First, we need to calculate the net income:
Net Income = EBIT - Interest Expense - Taxes
Net Income = $555,000 - $178,000 - $148,000
Net Income = $229,000
Then, we can calculate the earnings per share:
EPS = Net Income / Shares Outstanding
EPS = $229,000 / 100,000
EPS = $2.29