If Net Income Is $25,000 and There Were 18,000 Common

question 102

Multiple Choice

If net income is $25,000 and there were 18,000 common shares issued and outstanding the entire year,and 100 cumulative,nonconvertible,6% $100 par preferred shares outstanding the entire year,what is EPS if no dividends were declared during the year.There are two years' dividends in arrears on the preferred shares.(Rounded to the nearest cent)

• A) $1.39
• B) $1.18
• C) $1.25
• D) $1.16
• E) $1.36

---

Definitions:

Maximize Profit

The process or strategy aimed at achieving the highest possible profit from business operations, often by increasing revenue, reducing costs, or both.

Profit-maximizing Quantity

The level of output at which a firm achieves its highest profit, where marginal cost equals marginal revenue.

Total Profit

The overall financial gain made by a business after subtracting all expenses from the total revenue.

Profit-maximizing Price

The price level at which a company can sell its product to achieve the maximum possible profit, taking into account demand and production costs.