A Company Reports the Following Calculate the Company's Earnings Per Share on Common Stock

question 201

Essay

A company reports the following:? $\begin{array}{lr}\text { Net income } & \$ 150,000 \\\text { Preferred dividends } & \$ 10,000 \\\text { Shares of common stock outstanding } & 20,000 \\\text { Market price per share of common stock } & \$ 35\end{array}$ Calculate the company's earnings per share on common stock.

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Definitions:

Output Level

The quantity of goods or services produced by a business within a given period.

Allocative Efficiency

A state of the economy in which production represents consumer preferences; in other words, every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it.

Long-Run

A period of time in economics during which all factors of production and costs are variable, allowing for complete adjustment to changes.

Average Total Cost

The sum of average variable costs and average fixed costs, or simply the total cost divided by the quantity of output produced.