Multiple Choice
Earnings per share (EPS) should be reported for each of the following income statement captions except:
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14. Financial Statement Analysis
Ratios: Earnings Per Share (EPS)
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MoneyCo had sales revenue and net income during the current year of $500,000 and $60,000, respectively. The total amount of stockholders' equity was $600,000, and common shares outstanding were 120,000 all year. What is MoneyCo's earnings per share?
A
$0.10
B
$0.50
C
$2.00
D
$10.00
Verified step by step guidance1
Identify the formula for Earnings Per Share (EPS), which is: \( \text{EPS} = \frac{\text{Net Income}}{\text{Average Number of Common Shares Outstanding}} \).
Substitute the given values into the formula: Net Income is $60,000 and the Average Number of Common Shares Outstanding is 120,000.
Calculate the EPS by dividing the Net Income by the Average Number of Common Shares Outstanding.
Interpret the result to determine which of the given options matches the calculated EPS.
Review the calculation to ensure accuracy and confirm that the correct option is selected based on the calculated EPS.
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