Question

a. For the year ended December 31, 2015, Finco, Inc., reported earnings per share of $3.80....

a. For the year ended December 31, 2015, Finco, Inc., reported earnings per share of $3.80. During 2016, the company had a 4-for-1 stock split. Calculate the 2015 earnings per share that will be reported in Finco's 2016 annual report for comparative purposes. (Round your answer to 2 decimal places.)

b. Additionally, during 2017, Finco had a 3-for-1 stock split. Calculate the 2015 earnings per share that will be reported in Finco's 2017 annual report for comparative purposes. (Round your answer to 2 decimal places.)

c. If Finco had issued a 12% stock dividend in 2016 and did not have a stock split, calculate the 2015 earnings per share that will be reported in Finco's 2016 annual report for comparative purposes. (Round your answer to 2 decimal places.)

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Answer #1

Solution:

a.Calculation of 2015 earnings per share that will be reported in Finco's 2016 annual report for comparative purposes:

Earning Per Share given = $3.80

= $3.80 / 4 per share

  = $0.95 per share

b.Calculation of 2015 earnings per share that will be reported in Finco's 2017 annual report for comparative purposes:

Earning Per Share given = $3.80

= $3.80 / (4*3)

= $3.8 / 12

= $0.32 per share

c.Calculation of 2015 earnings per share that will be reported in Finco's 2016 annual report for comparative purposes:

Earning Per Share given = $3.80

Earning Per Share = $3.80 / ( 1 + 12%)

= $3.8 / 1.12

= $ 3.39 per share

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