Assume the following facts for the current year:
|
Net income |
$200,000 |
|
Common dividends |
$20,000 |
|
Preferred dividends (The preferred stock is not convertible.) |
$10,000 |
|
Common shares outstanding on January 1 |
20,000 shares |
|
Common stock issued on July 1 2 for 1 stock split on December 31 |
5,000 shares |
Required
a. Compute the earnings per share for the current year.
b. Earnings per share in the prior year was $8.00. Use the earnings per share computed in (a) and present a two year earnings per share comparison for the current year and the prior year.