A company had 120,000 shares of common stock outstanding on January 1 and then sold 40,000 additional shares on March 30. Net income for the year was $280,000. What are the earnings per share?
James, did you ever receive an answer?
To calculate earnings per share (EPS), you need to divide the net income by the number of shares outstanding. In this case, let's break it down step by step:
1. Start with the number of shares outstanding on January 1: 120,000 shares.
2. Then, add the number of shares sold on March 30: 40,000 shares.
- Total number of shares at the end of the year = 120,000 + 40,000 = 160,000 shares.
3. Calculate the EPS:
- EPS = Net Income / Number of Shares
- EPS = $280,000 / 160,000 shares.
Now, let's plug in the numbers:
EPS = $280,000 / 160,000 shares = $1.75 per share.
Therefore, the earnings per share for the company is $1.75.