Daniels Transport has operating income of $68,200,interest expense of $210,dividends paid of $320,depreciation of $12,400,other income of $2,100,common stock of $48,500 with a par value of $1 per share,and retained earnings of $29,700.What is the earnings per share if the tax rate is 21 percent?
A)$1.14
B)$1.21
C)$.82
D)$.96
E)$1.33

Question

Quizplus · Accepted Answer

Earnings Per Share (EPS) is calculated as (Net Income - Dividends) / Shares Outstanding. First, calculate the Net Income: Operating Income + Other Income - Interest Expense - Taxes = Net Income. Taxes = 21% of (Operating Income + Other Income - Interest Expense). So, Taxes = 21% of ($68,200 + $2,100 - $210) = $14,709. Net Income = $68,200 + $2,100 - $210 - $14,709 = $55,381. Dividends are $320, so Net Income after Dividends = $55,381 - $320 = $55,061. Shares Outstanding = Common Stock / Par Value = $48,500 / $1 = 48,500 shares. EPS = $55,061 / 48,500 = $1.14.

Daniels Transport Has Operating Income of $68,200,interest Expense of $210,dividends