Question

Hello,

On December 31, 2021, Shamrock Ltd had 200,000 weighted average common shares outstanding and 58,000 preferred shares outstanding. Shamrock’s preferred shares are $3, cumulative preferred shares. There were no changes to the number of preferred shares outstanding during the year. No dividends were declared or paid in 2021 or 2020, although dividends were paid on preferred shares in 2019.

Shamrock had a net income of $2,714,000 for the year ended December 31, 2021.

Calculate Shamrock’s basic earnings per share. (Round answer to 2 decimal places, e.g. 15.25.)

thank you

Answer 1

Ans:

Basic earnings per share =

Profit attributable or available to ordinary shareholders – Preferred dividends / Weighted average no of Common shares Outstanding

   Basic EPS = $2,714,000-$174,000 / 200,000=$12.70 Per Share

Note:

Preferred dividends=3X58,000X 1 Years Arrears

=$174,000

*Preferred Dividend is due for last Year need to pay when Profits available Because it is Cumulative preferred Shares

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