tne amount or income acnievea auring a perioa expressea per snare oT common stoc

Question

tne amount or income acnievea auring a perioa expressea per snare oT common stocK outstanaing. ES must be disclosed for income from continuing operations and for discontinued operations Earnings per Share Earnings per Share (EPS) Relates amount of net income a company generates to the number of common shares outstanding Basic EPS Diluted EPS Net income Preferred dividends Basic EPS- Weighted-average number of common shares outstandin Goal is to relate performance for the period to the shares that were in place throughout that period Knowledge Check 01 Alpha Company has sales revenue of $5,000,000, cost of goods sold of $2,000,000, and net income of $750,000. For the last three years, the company has 1,000,000 shares of common stock authorized and 200,000 shares of common stock issued and outstanding. The company does not have any preferred stock. What is basic EPS for Alpha Company? PS

Explanation / Answer

Calculation of EPS:

EPS= Net income/ number of shares outstanding

= 750000/200000= 3.75

EPS= $3.75 per share

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