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Homework answers / question archive / Mary Poppins Company had 50,000 common shares outstanding at the beginning of 2020
Mary Poppins Company had 50,000 common shares outstanding at the beginning of 2020. On April 30, the company sold an additional 10,000 shares and on October 1, the company declared a 2 for 1 stock split. The net income for 2016 was $500,000 and the preferred shareholders received $125,000 of dividends. Mary Poppins Company has a December 31 year end. REQUIRED: Calculate the Earnings per Share for 2020.
1) Net income = $ 500000
- Prefrence dividend = $ 125000
Net income after dividend i.e. (Earning available for Equity shareholders) $ (500000-125000) = $ 375000
2) Total no. of shares (50000+10000) = 60000
Total no. of shares after splitting up (60000*2)= 120000
3) Earning Per Share = Earning available for Equity shareholders / Total no. of shares
= $ 375000/120000
= $ 3.125
