Question

How do we methodically calculate a firms Earnings per share and Dividend per share from given...

How do we methodically calculate a firms Earnings per share and Dividend per share from given financial statements.

Homework Answers

Answer #1

Calculation of Earning per share from financial statements:

Step 1: calculate total profit after tax.

Step 2: Figure out the total number of shares outstanding.

Step 3: divide total profit after tax by total number of share outstanding

Step 4: Hence, we will get Earning per share.

Calculation of Dividend per share from the financial statements:

Step 1: Calculate Earning per share as explained above.

Step 2: Determine the payout ratio of the company.

Step 3: Multiply Earning per share with payout ratio.

Step 4: Hence , we will get dividend per share.

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