Earnings per Share Calculation | Birch Ltd. | CFA® Level 1 Exam

Earnings per Share Calculation

Prev Question Next Question

Question

Birch Ltd. had net income for the year of $101,504 and a simple capital structure consisting of the following common shares outstanding:

Months Outstanding Number of Shares

January - February 24,000 -

March - June 29,400 -

July - November 36,000 -

December 35,040 -

Birch's earnings per share (rounded to the nearest cent) were ________.

Answers

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D. E.

D

EPS equals net income divided by the weighted average number of shares outstanding and is $3.20 ($101,504 / 31,720). Following is the calculation for the weighted average number of shares outstanding:

24,000 X (2 / 12) = 4,000

29,400 X (4 / 12) = 9,800

36,000 X (5 / 12) = 15,000

35,040 X (1 /12) = 2,920

weighted average 31,720

Prev Question Next Question