Question

Salt Company reports net income of $360 million for 2017; the company's tax rate is 40%. At the beginning of the year, 200 million common shares were outstanding. On July 1, Salt sold an additional 80 million shares and on October 1 distributed a 10% stock dividend. On December 1, the company reacquired 24 million of its outstanding shares.
a. The company's weighted-average shares for the purpose of calculating basic EPS will be ____________.

Answer 1

The company's weighted-average shares for the purpose of calculating basic EPS will be $1.80

Explanation:

• Salt Company reports net income of $360 million for 2017; the company's tax rate is 40%. At the beginning of the year, 200 million common shares were outstanding.

• On July 1, Salt sold an additional 80 million shares and on October 1 distributed a 10% stock dividend.

• On December 1, the company reacquired 24 million of its outstanding shares.
• Salt Company reports net income= $360
• 200 million common shares were outstanding
• EPS = $\frac{360}{200}$ = $1.80
• The company's weighted-average shares for the purpose of calculating basic the EPS will be $1.80
• Earnings per share (EPS) is a company's net profit which is divided by the number of common shares.