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A firm reports a net margin of 5.00%. The firm has 1,656,320.00 million shares outstanding. The...

A firm reports a net margin of 5.00%. The firm has 1,656,320.00 million shares outstanding. The firm has invested in a new product that will increase sales by $4,290,600.00 million this year.

a. What will be the increase in earnings this year if the sales increase occurs?

b. What will be the increase in earnings per share?

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Answer #1

Net margin = 5.00%

Shares outstanding = 1,656,320.00 million

Increase in sales = $4,290,600.00 million

a. What will be the increase in earnings this year if the sales increase occurs?

Answer = If sales increase then increase in earnings = $4,290,600.00 million * 5%

= 214,530.00 million

b. What will be the increase in earnings per share?

Answer = Earnings per share = Earnings / Number of shares outstanding

Increase in earnings per share = Increase in earnings / Number of shares outstanding

= 214,530.00 million/ 1,656,320.00 million

= 0.1295 per share

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