Earnings Per Share (EPS)

Answer Key

Year 1 EPS $2.00 per share

Year 2 EPS $1.09 per share

Year 1 reported in Year 2 $1.00 per share

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There Company had 202,000 CS shares O/S at 1/1/Y1. Following is info for Year 1 & Year 2. 3 are no potential common shares outstanding. 4 5 2/28/81 reacquired 6K shares of treasury stock 6 10/31/41 reissued all treasury shares reacquired on 2/28/41 7 11/30/41 issued 24K new shares 8 12/31/41 net income for Year 1 is $400K 9 10 Calculate Basic EPS for Year 1. Calculate Basic EPS for Year 2 assuming the following: 3/31/42 6/30/42 12/31/42 issued 5K new shares declared & issued a 2 for 1 stock split net income for Year 2 is $500K Calculate Basic EPS for Year 1 to be reported in the Year 2 income statement