Question

At December 31, 2020 and 2021, Funk & Noble Corporation had outstanding 820 million shares of common stock and 2 million shares of 8%, $100 par value cumulative preferred stock. No dividends were declared on either the preferred or common stock in 2020 or 2021. Net income for 2021 was $426 million. The income tax rate is 25%. Calculate earnings per share for the year ended December 31, 2021. (Round your answer to 2 decimal places.)

Answer 1

Answer:

The earnings per share for the year ended 31st December 2021 is $0.52

Explanation:          

                                                                  million

Net income                                                   $426,000,000

preferred dividends(2million*8%)                         ($160,000)

Net income attributable to common shares   $425,840,000

Earnings per share =earnings attributable to common stock/common stock

common stock 820,000,000

Earnings per share=$425,840,000/820,000,000

Earnings per share=$0.52

The earnings attributable to each common  stock is $0.52 per share

The earnings per share is the dividend potential of Noble corporation, which implies the amount from  which dividends can be paid and also from investment projects can also be funded as retained earnings is the cheapest form of finance from availability and affordability points of views.