Green Thumb Nursery has 6,000 shares of stock outstanding at a market price of $20 a share.The earnings per share are $1.62.The firm has total assets of $315,000 and total liabilities of $186,000.Today,the firm is repurchasing $4,800 worth of stock.Ignore taxes.What will the earnings per share be after the stock repurchase?

Question

Quizplus · Accepted Answer

Number of shares outstanding = 6,000 - ($4,800/$20) = 5,760 shares; Earnings per share = ($1.62 × 6,000)/5,760 = $1.688.

Green Thumb Nursery Has 6,000 Shares of Stock Outstanding at a Market