Shamrock Company had net income of $34,000. The weighted-average common shares o

Question

Shamrock Company had net income of $34,000. The weighted-average common shares outstanding were 8,500. The company declared a $3,200 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is

a) $4.13.

b) $4.38.

c) $3.37.

d) $4.00.

e) $3.62.

Shamrock Company had net income of $34,000. The weighted-average common shares outstanding were 8,500. The company declared a $3,200 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is

a) $4.13.

b) $4.38.

c) $3.37.

d) $4.00.

e) $3.62.

Explanation / Answer

Earnings per share = (Net income - Divdends distributed on preferred stock) / weighted-average common shares outstanding

Earnings per share = (34000 -3200) / 8500

= 3.623

Hence, option e) $3.62

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