Partridge Company provides the following information for the year 2014:
$$\begin{array} { l l }
\text { Net income: } & \$ 31,200 \
\text { Market price of common stock: } & \$ 12.00 / \text { share } \
\text { Dividends paid: } & \$ 0.80 / \text { share } \
\text { Common stock outstanding at January } 1,2014 : & 110,000 \text { shares } \
\text { Common stock outstanding at December } 31,2014 : & 150,000 \text { shares } \
\text { (No preferred stock issued) } &
\end{array}$$
-
How much was the earnings per share for 2014?
A) $0.21
B) $0.28
C) $0.24
D) $4.05

Question

Partridge Company provides the following information for the year 2014:
$$\begin{array} { l l } 
\text { Net income: } & \$ 31,200 \
\text { Market price of common stock: } & \$ 12.00 / \text { share } \
\text { Dividends paid: } & \$ 0.80 / \text { share } \
\text { Common stock outstanding at January } 1,2014 : & 110,000 \text { shares } \
\text { Common stock outstanding at December } 31,2014 : & 150,000 \text { shares } \
\text { (No preferred stock issued) } &
\end{array}$$
-
How much was the earnings per share for 2014?
A) $0.21
B) $0.28
C) $0.24
D) $4.05

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated as net income divided by the average number of common shares outstanding. The average number of shares is (110,000 + 150,000) / 2 = 130,000. EPS = $31,200 / 130,000 = $0.24.

Partridge Company Provides the Following Information for the Year 2014