GW Inc. had $800 million in retained earnings at the beginning of the year. During the year, the firm paid $0.75 per share dividend and generated $1.92 earnings per share. The firm has 100 million shares outstanding. At the end of year, what was the level of retained earnings for GW?
A) $725 million
B) $917 million
C) $882 million
D) $807 million

Question

Quizplus · Accepted Answer

GW Inc. started the year with $800 million in retained earnings. During the year, it generated $1.92 earnings per share on 100 million shares, totaling $192 million in earnings. It paid out $0.75 per share in dividends on 100 million shares, totaling $75 million in dividends. The net increase in retained earnings is $192 million - $75 million = $117 million. Adding this to the starting retained earnings gives $800 million + $117 million = $917 million.

GW Inc Had $800 Million in Retained Earnings at the Beginning