For 2012, Flamingo Products had net income of $1,000,000. At 1 January 2012, there were 1,000,000 shares outstanding. On 1 July 2012, the company issued 100,000 new shares for $20 per share. The company paid $200,000 in dividends to common shareholders. What is Flamingo's basic earnings per share for 2009?

Question

Business

Jace Richards

14 September, 09:15

For 2012, Flamingo Products had net income of $1,000,000. At 1 January 2012, there were 1,000,000 shares outstanding. On 1 July 2012, the company issued 100,000 new shares for $20 per share. The company paid $200,000 in dividends to common shareholders. What is Flamingo's basic earnings per share for 2009?

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Answers (1)

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Frank Lucero · Answer 1

Earnings per share = 0.95

Explanation:

We know,

Earnings per share = (Net Income - Prefer Dividend) : Number of weighted average outstanding share.

Given,

Net Income = $1,000,000

Prefer Dividend = 0

Number of weighted average outstanding share =

January 1 2012 = 1,000,000 * 12/12 = 1,000,000 Shares

July 1 2012 = 100,000 * 6/12 = 50,000 Shares

Number of weighted average outstanding share = 1,050,000 Shares

Putting the value into the formula we can get that,

Earnings per share = (Net Income - Prefer Dividend) : Number of weighted average outstanding share.

or, Earnings per share = ($1,000,000 - 0) : 1,050,000

or, Earnings per share = $1,000,000 : 1,050,000

or, Earnings per share = 0.95