A fiRm Has 30,000 Shares of Stock Outstanding, $450,000 in Debt

question 343

Multiple Choice

A firm has 30,000 shares of stock outstanding, $450,000 in debt at a 9% rate, an EBIT of $112,000, and a tax rate of 0%. What is the EPS?

• A) $2.38
• B) $2.51
• C) $2.87
• D) $3.36
• E) $3.73

---

Definitions:

Direct Write-Off Method

An accounting method where uncollectible accounts receivable are written off directly against income at the time they are deemed uncollectible.

Uncollectible Accounts

Financial debts deemed unrecoverable from debtors that are often written off as bad debt expense.

Matching Principle

An accounting principle that dictates expenses should be recorded in the same period as the revenues they helped to generate.

Manipulation

Manipulation in financial contexts refers to unethical or illegal actions to misleadingly influence market prices, company performance, or financial reports.