Question

The income statement for Nadeen, Inc. shows income before income taxes $700,000, income tax expense $210,000 and net income $490,000. If Nadeen has 100,000 shares of common stock outstanding throughout the year, earning per share is:
A $7.00
B $4.90
C $2.10
D None

Answer 1

Answer:

B $4.90

Explanation:

The earnings per share ratio (EPS), is an entities net income after tax that is available the shareholders divided by the weighted average number of shares of common stock that are outstanding during the period of the earnings.

As such, given;

net income after tax = $490,000

number of shares = 100,000

EPS = net income after tax/number of shares

= $490,000/100,000

= $4.90