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:

Marginal Revenue

The additional income received from selling one more unit of a good or service.

Marginal Cost

The elevation in aggregate cost associated with creating an extra unit of a good or service.

Monopolistically Competitive Market

A market structure in which many companies sell products that are similar but not identical, allowing for slight product differentiation and some price control.

Demand Curve

A graph showing the relationship between the quantity of a good or service that consumers are willing and able to purchase at various prices.