Question

Suppose the following information is available for Callaway Golf Company for the years 2017 and 2016. (Dollars are in thousands, except share information.) 2017 2016 Net sales $ 1,127,000 $ 1,134,600 Net income (loss) 91,420 61,030 Total assets 867,338 850,078 Share information Shares outstanding at year-end 61,400,000 69,200,000 Preferred dividends 0 0 There were 74,400,000 shares outstanding at the end of 2015. (a) What was the company’s earnings per share for each year? (Round answers to 2 decimal places, e.g. 15.25.)

Answer 1

Answer: (a) Earning per share in 2016: 0.85

(b) Earning per share in 2017: 1.4

Explanation:

Earning per share in 2016:

Net income (loss) = $61,030,000

Opening shares = 74,400,000

Ending shares = 69,200,000

Average no. of shares O/S = $\frac{74,400,000+69,200,000}{2}$

                                     = 71,800,000

Earning per share =  $\frac{Net\ Income}{Average\ no.\ of\ shares\ o/s}$

                              =  $\frac{61,030,000}{71,800,000}$

                              = 0.85

Earning per share in 2017:

Net income (loss) = $91,420,000

Opening shares = 69,200,000

Ending shares = 61,400,000

Average no. of shares O/S = $\frac{69,200,000+61,400,000}{2}$

                                     = 65,300,000

Earning per share =  $\frac{Net\ Income}{Average\ no.\ of\ shares\ o/s}$

                              =  $\frac{91,420,000}{65,300,000}$

                              = 1.4