Question

The Fitness Studio, Inc.’s 2018 income statement lists the following income and expenses: EBIT = $776,000, interest expense = $150,000, and taxes = $219,100. The firm has no preferred stock outstanding and 100,000 shares of common stock outstanding. Calculate the 2018 earnings per share.

Answer 1

Answer:

$4.069 per share

Explanation:

Earning before tax:

= Earning before interest and tax - interest expense

= $776,000 - $150,000

= $626,000

Earnings available for equity shareholders:

= Earning before tax - Taxes

= $626,000 - $219,100

= 406,900

Earnings per share:

= Earnings available for equity shareholders ÷ No. of common stock outstanding

= 406,900 ÷ 100,000

= $4.069 per share