Settles Corporation has provided the following financial data:
Dividends on common stock during Year 2 totaled $5,400. The market price of common stock at the end of Year 2 was $5.89 per share.
-The company's earnings per share for Year 2 is closest to:
A) $0.31 per share
B) $0.47 per share
C) $0.79 per share
D) $3.88 per share

Question

Settles Corporation has provided the following financial data:
   Dividends on common stock during Year 2 totaled $5,400. The market price of common stock at the end of Year 2 was $5.89 per share.
-The company's earnings per share for Year 2 is closest to:
A) $0.31 per share 
B) $0.47 per share 
C) $0.79 per share 
D) $3.88 per share

Quizplus · Accepted Answer

Earnings per share = Net Income ÷ Average number of common shares outstanding*
= $18,400 ÷ 60,000 shares = $0.31 per share (rounded)
*Number of common shares outstanding = Common stock ÷ Par value
= $240,000 ÷ $4 per share = 60,000 shares

Settles Corporation Has Provided the Following Financial Data