Zacariah's Nursery has 6,000 shares of stock outstanding at a market price of $20 a share. The earnings per share are $1.54. The firm has total assets of $315,000 and total liabilities of $186,000. Today, the firm is paying an annual cash dividend of $0.80 a share. Ignore taxes. What will the earnings per share be after the dividend is paid?

Question

Quizplus · Accepted Answer

The earnings per share (EPS) is calculated based on net income and the number of shares outstanding. Paying a dividend does not affect the net income or the number of shares, so the EPS remains $1.54 after the dividend is paid.

Zacariah's Nursery Has 6,000 Shares of Stock Outstanding at a Market