Swimtech Pools Inc. (SPI) reported the following in its financial statements for

Question

Swimtech Pools Inc. (SPI) reported the following in its financial statements for the quarter ended March 31, 2015. December March Common Stock, $1 par, 58,000 shares outstanding Additional Paid-In Capital Retained Earnings 31, 2014 31, 2015 $ 58,000 S 58,000 34,800 23,200 23,200 34,800 Total Stockholders' Equity $116,000 $116,000 During the quarter ended March 31, SPI reported Net Income of $4,060 and declared and paid cash dividends totaling $4,060 1. Calculate earnings per share (EPS) for the quarter ended March 31. (Round "Earnings per Share" to 2 decimal places.) Earnings per Share Return on Equity

Explanation / Answer

Solution:

Earnings Per Share

Earnings Per Share = Net Profit attributable to Common Stockholders / Weighted Average Number of Common Shares outstanding for the period

= $4,060 / 14,500 Shares

= $0.28

Weighted Average Number of Shares for quarter ended Mar 31 = 58,000*1/4 = 14,500 Shares

Return on Equity %

Return on Equity = Net Income / Average Total Shareholders Equity x 100

Average Total Shareholder Equity = ($116,000 + 116,000) / 2 = $116,000

Return on Equity = 4,060 / 116,000 x 100 = 3.50%

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