Question

Fox Co. had 120,000 shares of common stock outstanding at January 1. On July 31, it issued 60,000 additional shares of common stock. Outstanding all year were 10,000 shares of nonconvertible cumulative preferred stock. What is the number of shares that Fox should use to calculate earnings per share for the calendar year?

Answer 1

Answer:

180 000 common stock shares outstanding

Explanation:

preference shares are not used in calculating earning per share. Earning per share is the part of the firm's profit that is attributed to common stock shares. It is an indicator of financial strength of a company. It also shows the intrinsic value of the company's shares. This can be used to determine if a share is overvalued or under valued in the equity market.

The company  has 120, 000 common stock shares and issued additional 20,000 common stock shares totaling 180,000 common stock shares.