The earnings per share of common stock for 2018 and 2017. Earning per share -
For 2018 = $0.49
For 2017 = $0.38
Earning Per Share = (Net Income - Preferred Dividends) / Weighted Average Number of Common Shares Outstanding
For 2018 -
Net Income = $66,000
Preferred Dividend = Preferred Stock at the end of 2018 * Preferred Dividend Rate
= $102,000 * 4%
= $4,080
Weighted Average Number of Common Shares Outstanding = (Common Shares Outstanding at the end of 2017 + Common Shares Outstanding at the end of 2018) / 2
= (119,000 + 133,000) / 2
= 252,000 / 2
= 126,000
Therefore,
Earning Per Share = ($66,000 - $4,080) / 126,000
= $61,920 / 126,000
= $0.49142857142
= $0.49 (rounded off to two decimal places)
For 2017 -
Net Income = $43,000 (Given)
Preferred Dividend = Preferred Stock at the end of 2017 * Preferred Dividend Rate
= $102,000 * 4%
= $4,080
Weighted Average Number of Common Shares Outstanding = (Common Shares Outstanding at the end of 2016 + Common Shares Outstanding at the end of 2017) / 2
= (88,000 + 119,000) / 2
= 207,000 / 2
= 103,500
Therefore,
Earning Per Share = ($43,000 - $4,080) / 103,500
= $38,920 / 103,500
= $0.37603864734
= $0.38 (rounded off to two decimal places).
In finance, stock consists of all the shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporation in proportion to the total number of shares.
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