Question

Murray Company reports net income of $728,000 for the year. It has no preferred stock, and its weighted-average common shares outstanding is 260,000 shares. Compute its basic earning per share.

Answer 1

The answer is $2.8

Step-by-step explanation:

Earnings Per Share(EPS) is the part of company's earnings that goes to each common share owner.

It is calculated as net income minus preferred dividend(if any) / weighted-average common shares outstanding.

Net income equals $728,000

Weighted-average common shares outstanding equals 260,000 shares

Therefore, basic earning per share is

$728,000 /260,000

= $2.8