DD&L has a market value equal to its book value,excess cash of $400,other assets of $7,600,equity of $8,000,200 shares of stock outstanding,and net income of $900.The firm has decided to pay out all its excess cash as a cash dividend.What will be the earnings per share after the dividend is paid?

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated as net income divided by the number of shares outstanding. Since the firm is paying out excess cash as a dividend, this does not affect net income or the number of shares outstanding. Therefore, the EPS calculation is simply $900 net income divided by 200 shares, which equals $4.50 per share.

DD&L Has a Market Value Equal to Its Book Value,excess